This research work assessed deposit money banks and the growth of small scale enterprise. The objectives of this study is to examine the efficiency of SMEs in accessing adequate credit from DMBs in Nigeria, to determine the potential of DMBs’ credit in fostering SME growth; identify the challenges faced by SMEs in accessing finance from DMBs in Nigeria. Data were collected through questionnaire distributed to respondents. Simple percentages were used in presenting data while the chi-squared (X2) statistical technique was used to test the hypothesis. The result revealed that all the sampled investors in Small and Medium Scale Enterprises sourced their funds from personal savings, money lenders, thrift associations, friends and family members while a few sourced part of their working capital from banks. Equally it was observed that the factors that prevent SMEs from borrowing from Deposit Money Banks include lack of collateral, high interest rate, competition from other business, too many bureaucratic processes, poor financial plan, inability to pay previous loans and others. The work recommended that the Nigeria government should recognize the importance of SMEs and attach priority to the development of SMEs by encouraging the deposit money banks to assist them with loans because they constitute a major tool in boosting employment in the country. Also, For the deposit money banks to be more efficient under this area, the loan departments of every money deposit banks should assess each SMEs on its own merit to determine its viability and grant direct credit to each on the basis of the project’s viability without sacrificing credit standard.


1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Research Hypotheses
1.6 Scope of the Study
1.7 Significance of the study
1.8 Definition of Technical Terms

2.1 Introduction
2.2 Conceptual Literature
2.2.1 Meaning of Small Scale Enterprises (SSES)
2.2.2 Concept of SMEs
2.2.3 Conceptual Framework Sources of Financing SMEs in Nigeria
2.2.4 Bank lending and SMEs development in Nigeria
2.2.5 Roles and Importance of Small Scale Enterprises
2.2.6 Brief history of SMEs in Nigeria
2.2.7 Problems Facing Small Scale Enterprise in Nigeria
2.2.8 Concept of Economic Development
2.2.9 The Business of Banking
2.2.10 Role of the Banking Sector in Financing SMEs:
2.2.11 The Main Sources of Financing SMEs in Nigeria
2.3 Theoretical Framework
2.3.1 The Lifecycle Approach
2.3.2 The Pecking Order Theory
2.3.3Agency Theory
2.4 Empirical Review
2.5 Summary of Chapter

3.1 Introduction
3.2 Research Design
3.3 Population
3.4 Sample Size of the study
3.5 Method of Data Collection
3.6 Measurement of variables
3.7 Method of Data Analysis
3.8 Summary of the Chapter

4.1 Introduction
4.2 Data Presentation, Analysis and Interpretation
4.2.1 Data Presentation, Analysis and Interpretation based on research Questions
4.2.2 Data Presentation, Analysis and Interpretation based on hypothesis
4.3 Discussion of Research Findings
4.4 Summary of the Chapter

5.1 Summary
5.2 Conclusion
5.3 Recommendations

1.1 Background of the study
The role of commercial banks in the development of SMEs is vital to economic developmensts. It is acknowledged that the availability of financial capital is a pre-requisite for rapid development. Since efficient management of scarce resources are best facilitated by financial institutions (Myers, 1984). It therefore follows that banks have vital role. Things they do to small and medium scale enterprises among others by making their vast financial resources available for financial and promotes developments. The peculiar circumstance which characterized the situation of under-development which make this role more pertinent. Nigeria is characterized with low level per capital income (Kpelai, 2009). There are also disparities in the distribution of income as well as variations in savings propensities at different level of income. Quite often the relief from the handicaps is the best provided by banks.

The quest for economic development to ensure overall improvement in individual well-being of citizens has been the preoccupation of every nation. The process involves a number of approaches. One of these is the adoption of an industrialization strategy at a point in time relevant to the prevailing needs of development (Obiatyo, 2001). Developing countries are under much pressure in this regard because of their general peculiar features. Businesses, unlike people, are not created equally. There are some companies that would be missed if they ceased to exist, but life would go on. There are others whose collapse would cause vast sections of economies and societies to implode. Into this second category falls the deposit money bank. Deposit money banks are the most important savings mobilizing and financial resource allocation institutions. Consequently, their roles make them an important phenomenon and strong pillar in economic growth and development. (Uzonwanne, 2015)
Deposit money, banks which are also known as commercial banks, are financial institutions that provide services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of activities deposit. According to mainstream theory, they act as financial intermediaries to channel savers’ money to firms and individuals who seek funding for their acts (Mambula, 2002). Their importance as a catalyst to economic growth and development is widely recognized by both monetary and development economists.

The Nigeria finance system is dominated by the banking sector, especially the deposit money banks which provides the foundation for the development of financial system (Mordi, 2002). Their credit component constitutes a major link between the monetary sector and the real sector of the Nigerian economy.

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