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Driven by the pressing need to tackle the financing hurdles that Small
and Medium-scale Enterprises (SMEs) face in Nigeria, this study delves into the
impact of financial innovation and inclusion on SME financing. We adopted a
mixed-methods approach, combining quantitative and qualitative analyses to gain a
deeper understanding. Our analysis drew on secondary data, from the Central Bank
of Nigeria's Statistical Bulletin (2022). We examined the relationships between
SME financing and various financial innovation variables, including Automated
Teller Machines (ATMs), Point of Sales (POS) terminals, Mobile Payments (MP),
and Loans from Rural Branches of Commercial Banks (LRBCB). Our findings,
based on the Autoregressive Distributed Lag (ARDL) model, reveal that ATMs,
MP, and LRBCB have a positive and significant impact on SME financing,
while POS terminals have a positive but insignificant impact in the short run,
becoming significant in the long run. Overall, our study demonstrates that financial
innovation and inclusion have a significant impact on SME financing in Nigeria.
We recommend that policymakers and financial institutions expand ATM networks
and promote POS technology integration in SMEs, while also enhancing digital
financial literacy through targeted initiatives.
