CHAPTER ONE

INTRODUCTION

1.1      BACKGROUND OF THE STUDY

Small medium enterprises (SMEs) are considered the backbone of economic growth in all countries. They play an important role in Nigerians economic growth, as they constitute 97.2% of the companies in Nigeria .They also contribute to national development by positively influencing the distribution of income in both functional and nominal terms. In emphasizing the importance of SMEs ,Rogers,2014, stated; they enhance  capacity building as they serve as entrepreneurial training avenues ; they  create more employment opportunities; per unit of investment because of their labour intensive operations; they achieve a much more relative high value added operations because they  are propelled by basic economic activities that depend mostly on locally sourced raw materials; they provide feeder industry services as they serve as major suppliers of intermediate goods and components to large-scale industries as well as major agents for the distribution of final products of such industries; they provide opportunities for the development local skill and technology acquisition through adaptation. Despite the catalytic role of SMEs in the economic emancipation of countries, some of their major operational challenges in Nigeria include financial problems. About 80% of small and medium enterprises are stifled because of poor financing.

The research intends to appraise the impact of commercial banks in the financing of SMEs in Nigeria, with a case study of first bank plc.