THE IMPACT OF CREDIT ACCESS ON ENTREPRENUERIAL DEVELOPMENT IN NIGERIA

This study is on the impact of credit access on entrepreneurial development in Nigeria. The main objective of the study is to examine the impact of credit access on entrepreneurial development in Nigeria. The study made use of secondary data obtained from world development indicators (WDI) for a period of 31 years starting from 1993 to 2023. Autoregressive Distributed Lag (ARDL) model and Granger Causality test were used to analyze the relationship among the variables, with merchandise trade as a proxy for entrepreneurial development, while domestic credit to private sector, real effective exchange rate, inflation rate, and interest rate were employed as explanatory variables. The ARDL short run results revealed that domestic credit to private sector and inflation rate had no statistically significant effect on entrepreneurial development. This implies that short run variations in credit availability and price levels do not immediately influence entrepreneurial performance in Nigeria. The Granger Causality results further showed no evidence of bi-directional causality among the variables. However, uni-directional causality was reported flowing from merchandise trade (MERT) to Inflation rate (INFR), Inflation rate (INFR) to exchange rate (EXCH), and between inflation rate (INFR) and exchange rate (EXCH). Additionally, a weak unidirectional causality was reported flowing inflation rate (INFR) to domestic credit to private sector (DCPS). The findings suggest that in the short run, credit access does not significantly drive entrepreneurial development in Nigeria, while macroeconomics variables such as inflation and exchange rate demonstrate stronger causal dynamics. The study therefore recommends that policymakers focus on stabilizing inflation, improving credit accessibility, and enhancing financial sector efficiency in order to foster sustainable entrepreneurial development in Nigeria.