Shadow Finance and Small and Medium Scale Enterprises in Cross River State
Abstract
The study investigated the impact of shadow finance on small and medium-scale enterprises in Cross River State. The specific objectives included examining the effects of Esusu, moneylenders, fintech loan apps, and cooperative societies on small- and medium-scale enterprises in Cross River State. A survey research design was employed, with data obtained from primary sources. The study population comprised 200 SMEs in Calabar, Ikom, and Ogoja, using a structured questionnaire. Data were analyzed using descriptive statistics and multiple regression analysis to determine the relationship between shadow finance indicators and SME development. Based on these results, shadow finance significantly improves SME access to capital and supports short- term business operations. Esusu and cooperative lending had a positive impact on sales growth. The study recommended that the Central Bank of Nigeria should enforce stricter regulation of digital lenders and promote lower-interest credit facilities through the Bank of Industry. SMEs should also adopt financial literacy and formal registration to qualify for institutional funding.