Financial Inclusion Strategy and Access to Credit by Micro Small and Medium Scale Enterprise (MSMEs) in Nigeria

Financial inclusion avails all economic units the opportunity to access financial services needed to boosteconomic activities. One of the objectives of financial inclusion is to provide access to finance for the poormajority who initially do not use formal financial services. The MSMEs requirement for funds is hampered bytheir limited access to the financial market. This study however investigated the effect of financial inclusionstrategies on access to credit by micro, small and medium scale enterprises (MSMEs) in Nigeria. Data for thestudy were collected from the CBN Statistical bulletin for the period of 1991 to 2019. The explanatory variablesused to develop a multiple regression model captured the market capitalization, pension account, insuranceaccount, microfinance account and e-banking as strategies to financial inclusion. The AutoregressiveDistributive Lag model was developed and analyzed for long and short-run dynamics of financial inclusion onaccess to loan and advances by the MSMEs in Nigeria. The bound test showed that financial inclusion strategieshad a long-run relationship with loan and advances of the MSMEs. The coefficient of determination explained99% of access to loans and advances by the MSMEs in Nigeria. The coefficients of regression revealed that lagsof Loan and Advances to MSMEs had adverse endogenous effects on the model. More so, activities in thecapital market (MKTC) and pension accounts (PA) at lag 1 have positive and significant effects on credit toMSMEs (LA) in Nigeria; but insurance accounts (IA), microfinance account (MFA) and e-banking innovations(EBDUM) creates unstable significant effects on credit to MSMEs in Nigeria. The study posits that financialinclusion strategies have a long-run impact on MSMEs with the capital market and pension funds the majorenhancers of MSME funding