Society of African Journal Editors

Ilorin Journal of Management Sciences

ASSESSMENT OF THE EFFECT OF SMALL AND MEDIUM SCALE ENTERPRISES’ PATRONAGE ON FINANCIAL PERFORMANCE OF MICROFINANCE BANKS IN ILORIN, KWARA STATE

Authors: Abdulrasaq SALMAN, Yinusa Alabi OLAWALE, Taofiq Alao SAKA

Journal: Ilorin Journal of Management Sciences

Small and Medium Scale Enterprises (SMEs) are the entire variety of money-making activity within all sectors such as banking sectors and share amount of general harms that deter effective performance in many nations. However, the effect of SMEs in the economy generally on microfinance banks have not been observed due to low effect of microfinance banks service products as expected to meet the required needs of entrepreneurs and to enhance the business relation of SMEs. Therefore it becomes imperative to examine the effect of SMEs patronage on the performance of Microfinance Banks (MFBs) in Ilorin, Kwara State. The study used a well-structured questionnaire to collect data from 104 employees of five (5) selected Microfinance Banks (MFBs) in Ilorin Metropolis. Pearson correlation at 5% level of significance was used to test the formulated hypothesis of the study. Findings of the study show that there is a significant correlation between small and medium scale enterprise (SMEs) and product services of microfinance banks which include loan service (R=0.950), e-transacts (R=0.939), financial advisory (R=0.964) and group collection services (R=0.926) is high at 5% level of significance. The study concludes that when SMEs properly harnessed and supported by microfinance financial product services it will contribute significantly to the performance of MFBs. The study recommends that SMEs as a sub-sector of the economy improve the performance of MFBs but the growth of Microfinancing industry required further improvement for better financial performance in the industry.