Bank growth, competition, and small business financing in Nigeria

Cosmas Ikechukwu Asogwa, Nonye Azih, Godwin Keres Okoro Okereke, Hyginus Osita Omeje, Christiana Ukamaka Nwachukwu, Joseph Ndozianyichukwu Chukwuma, Honesta Chidiebere Anorue, Favour Amarachi Moghalu, Godwin Emeka Eze and Anthonia Uju Uzuagu

Afro-Asian Journal of Finance and Accounting, 2022, vol. 12, issue 4, 526-550

Abstract: This study used ex post-facto design to examine how competition among high-growth banks has affected the banks' provision of assets to small business borrowers in Nigeria following several regulations. The study used a bi-sample structure through a judgmental technique that examined 126 and 96 firm-years between 2001 and 2017, which enabled us to test both pre- and post-bank growth-competition Boone model effects. We found evidence that in both the pre- and post-bank-growth eras, competition significantly increased small business loans consistent with 'competition-stability' hypothesis. A unit increase in the Boone-competition indicator resulted in a 3.8% credit supply. However, when we used concentration ratio (CR6), we found that pre-mega structure competition yields negative effects but that the post-growth effect on credit supply remains positive. Controlled macroeconomic factors yield a very significant effect on credit supply. Thus, policymakers should not ignore the variables in competition-monetary transmission policies in Nigeria.

Keywords: bank competition; small business; competition; lending; growth; MegaBank; Boone competition indicator. (search for similar items in EconPapers)
Date: 2022
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