Business, Management and Accounting
3 years ago

Cash flow positively impacts banks' lending to SMEs in Nigeria.

International Journal of Foreign Trade and International Business
Impact of cash flow on banks’ lending to SMEs in Nigeria: An empirical analysis
Danjuma Ahmad, Mohammed Bawuro Buba

Paper Summary

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The study looked at how cash flow affects banks' lending to small businesses in Nigeria. They used data from 49 companies listed on the Nigerian stock exchange from 2005 to 2018. The results showed that both current and past cash flow have a positive impact on the amount of credit given by banks to firms. However, if a firm's financial situation worsens, banks are less likely to lend them money. The study suggests that the government should make it easier for small businesses to access funding and establish more financial institutions to support sectors like agriculture and manufacturing.