ROLE OF MICROFINANCE BANKS IN ENHANCING FINANCIAL INCLUSION AND SERVICES:

Abstract

This study investigates the role of microfinance banks in enhancing financial inclusion and service provision among Small and Medium Enterprises (SMEs) in Lagos State. The research focuses on two primary objectives: evaluating the impact of credit facilities on financial inclusion and assessing the effect of financial enlightenment programs on SMEs. Adopting a survey research design, the study distributed 120 questionnaires, achieving a response rate of 75%, with 90 valid responses analyzed using SPSS software. Descriptive statistics, including frequencies and percentages, provided an overview of the data, while chi-square tests were applied to test the hypotheses at a 0.05 significance level. The findings indicate a significant positive relationship between the availability of credit facilities and the financial inclusion of SMEs. Furthermore, financial enlightenment programs are shown to substantially improve financial literacy and inclusion among SME operators. The study underscores the critical role of microfinance banks in facilitating access to financial services for SMEs, which are pivotal to economic growth and employment generation in Lagos State. It highlights that simplifying the credit application process, reducing interest rates, and expanding financial education initiatives can significantly enhance the effectiveness of microfinance banks in promoting financial inclusion. By addressing these areas, microfinance institutions can better support the growth and sustainability of SMEs, ensuring they have the necessary resources and knowledge to thrive in a competitive market. The study's recommendations aim to inform policy and operational strategies of microfinance banks, fostering a more inclusive financial environment that benefits the broader economy