Entrepreneurial Finance and Economic Growth: Evidence from Nigeria

Abstract

Against the backdrop of the failure of state-directed credit at enhancing entrepreneurship even with recourse to the supply-leading theoretical perspective, this study focuses on investigating the impact of entrepreneurship financing on economic growth with specific interests in commercial bank financing activities and the effect of credit to the private sector on the economy and how well microfinance banks’ credit impacted on entrepreneurship and by extension economic growth for a period of time considered to be relatively stable in the Nigerian economy. This study thus speaks to the knowledge gap created by underlying assumptions of the supply-leading impact of finance from the public sector. Both descriptive and inferential statistics from the analysis carried out with results showing that both commercial banks’ financing and microfinance banks’ credit impact on economic growth are insignificant though there is a positive impact of credit to the private sector on growth. It is thus recommended among others that for formal credit to impact positively and significantly on entrepreneurship and economic growth, friendly economic policies must be put in place and agencies as well as other institutions of government saddled with the responsibilities of enhancing entrepreneurship financing must be properly supervised and managed by capable technocrats.

Keywords: Entrepreneurship, Economic Growth, Gross Domestic Product, Microfinance, Commercial Banks.