The Impact of CBN Monetary Policy on the Survival SMEs in Nigeria

Abstract

The purpose of this study was to determine how the CBN's monetary policies affect Nigerian SMEs' ability to survive. To investigate the data properties, a number of tests were run, including the unit-root test, and descriptive statistics. The explanatory variables and the dependent variable were tested for the presence of time-varying volatility and leptokurtosis using descriptive statistics. The relationship between the variables over the long and short terms was further examined using the Augmented Dickey Fuller (ADF) unit root test. Co-integration testing was done to confirm the outcome of the unit root test and to determine whether there was a long-term relationship between the variables. The findings indicate that whereas lending interest rates are negatively correlated with SME growth, money supply, commercial bank loans and advances, and bank reserves are positively correlated with SME growth. The study came to the conclusion that monetary policy is crucial to the success of SMEs in Nigeria. The consequence is that for SMEs to survive in Nigeria, the interaction of these factors is crucial.