European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals


Evaluation of The Nexus Between Financial Inclusion and Economic Growth in Nigeria (1980-2020) (Published)

The focus of financial inclusion is the easy access of financial services to the populace to tackle poverty, improve living standard and address the general welfare of the people for the purpose of enhancing economic growth. This paper examines how financial inclusion relates with economic growth in Nigeria. Data was obtained from the bulletins of the Central Bank of Nigeria covering the period 1981 to 2020. Statistical analysis involves the use of descriptive statistics, Johansen Co-Integration Test, Phillips-Perron Unit Root Test, Pairwise Granger Causality and Error Correction Model.  To estimate the hypotheses formulated in alignment with the set objectives., the Error Correction Model was used. Economic growth, the dependent variable, was proxied by Gross Domestic Product, while total bank deposit and total credit disbursement constitute what was used to proxy the independent variable financial inclusion. The Error Correction Model result shows that there was a positive and statistically significant relationship between total bank deposit and gross domestic product. Total credit disbursement has a negative and an insignificant relationship with gross domestic product. The result from the study validates the finance led growth hypothesis and established that finance is one of the factors that causes economic growth in Nigeria. The consequence of this findings is that policy makers should pay more attention on long run financial policies that can enhance effectiveness of the financial sector in promoting growth. In addition, the CBN should focus on reduction of interest rate of banks in other to increase financial intermediation.

Keywords: Financial Inclusion, Financial exclusion, Loan, economic growth, total bank deposit

Effect of Microfinance Banks’ Interest Rate on Loan Repayment Capability of Borrowers (Published)

This study examined how microfinance banks’ interest rate on loan affects repayment capability of borrowers in Lapo microfinance Bank. This study examined factors affecting loan repayment plan of borrowers; with a view on the impact of promptness of loan repayment on Micro Finance Insittution sMFI loans; and find out measurse put in place by MFsI to improve repayment plan of borrowers. Lapo Bank borrowers in Osun state branch participated in the study. A sum total of 110 customers of Lapo microfinance bank participated in the study. A structured questionnaire adapted from previous studies and grounded literature review was used in collecting data. Findings from the study showed that: there is significant effect of high interest rate of MFI on the repayment plans of borrowers’ loans, the frequency of loan repayment plan significantly has effect on borrowers’ ability to payback loan, there is significant difference in the perception of borrowers on effect of high interest rate of MFI on the repayment plans of borrowers’ loans based on gender and educational level. Also, the descriptive result showed that; Majority of the borrowers agreed that high interest rate affect loan repayment, it implied that Lapo and other microfinance bank interest rate on loan is higher compare to Deposit Money Banks. Majority of the participants believes that a single digit interest rate on loan could easy the paying back of loan. The study recommends that: Since default on loans is linked to high interest rate, MFIs should consider looking into their interest rates to encourage prompt pay menrt. This may be weighed with interest rates of Deposit money banks and made relatively lower to encourage borrowers of MFIs. KEYWORDS: Microfinance, Interestrate, Borrowers, Loan.

Citation:Olufolakemi Oludami Afrogha and Oluwamayowa Iyanuoluwa Oluleye (2021)Effect of Microfinance Banks’ Interest Rate on Loan Repayment Capability of Borrowers, European Journal of Accounting, Auditing and Finance Research, Vol.9, No. 9, pp.18-29




Keywords: Banks’, Interest Rate, Loan, Microfinance, Repayment, borrowers

Trade Credit Impact on Small and Medium Enterprises in Nigeria (Published)

The connection between trade credit and SMEs cannot be belittled which enable this study to examine the impact of trade credit on small and medium enterprises using Nigeria as a case study. The study employed frequency analysis, logistic regression and correlation analysis as the estimation techniques. The study found that cost of trade credit has a coefficient value of 0.036, standard error of 0.093, with the sig value of 0.701, indicating that cost of trade credit is positively important, but it is not significantly accessible to the SMEs. More so, credit flexibility has the coefficient value of 0.018, standard error of 0.091 with the sig value of 0.846, indicating that credit flexibility has a positive impact but not significant to influence SMEs. The study concluded that cost of trade credit affects SMEs, and credit flexibility has a positive impact on SMEs, while credit grant revealed a positive effect on the performance of SMEs, though government restriction has a negative impact on SMEs but not significant during the study period.

Keywords: Business, Loan, SMEs, and government restriction, trade credit

Credit Risk Management System of Commercial Banks: An Analysis of the Process (Published)

Credit risk is the risk that a financial institution will incur losses because the financial position of a borrower has deteriorated to the point that the value of an asset (including off-balance-sheet assets) is reduced or extinguished. The purpose of this work is to expatiate strategies to mitigate challenges resulting from unpaid loans, which could be used further in understanding the components of credit risk management (CRM) system of commercial banks (CBs) in a less developed economy. This was accomplished through the use of both primary (interviews) and secondary (various relevant documents) information from CBs and key management officials dealing with credit management. The investigation proved that credit risk can be managed and minimized when formidable strategic approaches are implemented and adhered to. This implies that the strategy operated by a bank is an important consideration for a CRM system to be successful. Ghana, a less developed economy, provides an excellent case for studying how CBs operating in economies with less developed financial sector manage their credit risk. 

Keywords: Borrower, Commercial Banks, Credit Risk Management, Loan

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