MONETARY POLICY AND SMALL MEDIUM ENTERPRISES (SMEs) PERFORMANCE IN NIGERIA

Abstract

The Small and Medium Enterprises (SMEs) have been known to play significant roles in promoting economic growth, employment generation and foreign exchange earnings among others, of both developed and developing economies. Monetary policy, on the other hand, actions and strategies employed by a central bank or monetary authority to control and regulate the money supply, interest rates, and credit conditions in an economy. This study therefore, examines how monetary policy affects the performance of SMEs in Nigeria based on the data covering the period from 1981–2020 using the Autoregressive Distributed Lag Model (ARDL). ARDL captures both long-run equilibrium relationships and short-term dynamics, allowing researchers to examine the interplay between variables over time. The study found that monetary policy has not been a potent tool for promoting the performance SMEs in Nigeria