COMMERCIAL BANKS’ LOAN AND CAPITAL FORMATION IN SMALL AND MEDIUM-SCALE ENTERPRISES: A STUDY OF UNITED BANK FOR AFRICA (UBA) BRANCH, ZAKI-BIAM, BENUE STATE
Abstract
This study examined the role played by commercial banks in generating finance for SMEs in
United Bank for Africa. A sample of 39 was drawn from the staff of UBA and SMEs
Managers/operators that have account with the bank. A cross-sectional survey design was
adopted for the study and the instrument used for data collection was questionnaire. This
questionnaire was tested and confirmed for reliability and validity before usage. Ordinary least
square regression with the aid of SPSSv25 statistical tool was employed for testing the
formulated hypotheses. Findings indicate that short terms loan is positively related to SMEs
capital formation, banks overdraft is positively related to SMEs capital formation and discounted
bill of exchange is positively related to SMEs capital formation. Based on the study’s findings,
recommendations in the following forms were made. Tat the government should cut down
interest rate on loan because the high interest rates on loan could undermine profits and cause a
loss of investment. They should develop policy frame work that will help increase access to loan and overdrafts to SMEs. In addition, banks as one of their statutory functions should help SMEs
in discounting bills of exchange.