The Moderating Effect of Business Growth On Financial Inclusion and Sustainability of Small and Medium Enterprises in North Central Nigeria (Published)
Small and Medium Enterprises (SMEs) are pivotal to economic development in Nigeria, yet their sustainability is often constrained by limited access to formal financial services. While financial inclusion is widely promoted as a catalyst for SME resilience, empirical evidence on its effectiveness remains inconsistent, suggesting the influence of contingent factors. This study addresses a critical gap by investigating whether business growth moderates the relationship between financial inclusion and SME operational efficiency—a key indicator of sustainability—in North Central Nigeria. Employing a quantitative, cross-sectional design, data were collected via structured questionnaires from a stratified sample of 399 SMEs across Benue, Kogi, Kwara, Nasarawa, Niger, Plateau, and the Federal Capital Territory. The constructs of financial inclusion were operationalized through six dimensions: Affordable Banking Services, Banking Diversity, Consumer Protection, Financial Literacy, Inclusive Credit Scoring, and Insurance Uptake. Data were analysed using Structural Equation Modelling (SEM) with ADANCO software to test direct and moderating effects. The results reveal that Banking Diversity (β = 0.518, p < 0.01) and Business Growth (β = 0.435, p < 0.01) have significant positive direct effects on Operational Efficiency. Conversely, Financial Literacy, Inclusive Credit Scoring, and Insurance Uptake showed non-significant or negative direct relationships. Crucially, the moderation analysis indicates that Business Growth significantly enhances the positive effects of Consumer Protection (β = 0.090, p < 0.05) and Insurance Uptake (β = 0.124, p < 0.05) on Operational Efficiency. However, it does not strengthen, and in some cases diminishes, the influence of other financial inclusion dimensions. The model explains 78% of the variance in Operational Efficiency (R² = 0.780). The study concludes that the impact of financial inclusion on SME sustainability is not uniform but is critically shaped by a firm’s growth trajectory. Policies that treat SMEs as a homogenous group are likely to be ineffective. The findings advocate for a differentiated, growth-sensitive approach to financial inclusion, prioritizing diverse banking services, robust consumer protection, and tailored insurance products to support scalable SMEs in achieving long-term sustainability
Keywords: Business Growth, Financial Inclusion, Operational Efficiency, SME sustainability, moderating effect, north central Nigeria, structural equation modelling