The Effect of Financial Inclusion Initiatives on SMEs’ Financial Reporting in Nigeria: A Case Study of Bank of Industry
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Background of the Study
Financial inclusion, aimed at providing affordable and accessible financial services to all individuals and businesses, has become a cornerstone of economic development in Nigeria. For small and medium enterprises (SMEs), financial inclusion initiatives offer access to credit, insurance, and financial education, which can significantly improve their financial practices, including reporting accuracy and transparency (Nwankwo & Salami, 2023).
The Bank of Industry (BoI), a development finance institution in Nigeria, has implemented several financial inclusion initiatives targeting SMEs. These programs include access to affordable loans, capacity-building workshops, and digital financial services. This study examines how these initiatives influence SMEs’ financial reporting practices, with a focus on the BoI’s efforts.
Statement of the Problem
SMEs often face challenges in maintaining accurate and transparent financial records due to limited resources, inadequate financial literacy, and lack of access to formal financial services. While financial inclusion initiatives aim to address these challenges, their effectiveness in improving SMEs’ financial reporting remains underexplored.
This study investigates the impact of financial inclusion initiatives by the Bank of Industry on the financial reporting practices of Nigerian SMEs. It seeks to determine whether these initiatives have improved the quality and transparency of SMEs’ financial statements, which are crucial for accessing further financing and complying with regulatory requirements (Ibrahim & Olaleye, 2024).
Objectives of the Study
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To assess the impact of financial inclusion initiatives by the Bank of Industry on SMEs’ financial reporting practices.
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To identify the challenges SMEs face in adopting improved financial reporting practices.
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To provide recommendations for enhancing the effectiveness of financial inclusion programs in Nigeria.
Research Questions
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How do financial inclusion initiatives by the Bank of Industry influence SMEs’ financial reporting practices?
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What challenges do SMEs face in adopting improved financial reporting practices?
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How can financial inclusion programs be enhanced to improve SMEs’ financial reporting in Nigeria?
Research Hypotheses
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Financial inclusion initiatives significantly improve SMEs’ financial reporting practices.
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Limited financial literacy and resources hinder SMEs from adopting improved financial reporting practices.
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Enhancing the scope and accessibility of financial inclusion programs leads to better financial reporting among SMEs.
Scope and Limitations of the Study
The study focuses on SMEs that have benefited from financial inclusion initiatives by the Bank of Industry between 2015 and 2025. It examines the quality of their financial reporting, the challenges faced, and the effectiveness of BoI’s programs. Limitations include variability in SME compliance with reporting practices and potential data collection challenges from informal businesses.
Definition of Terms
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Financial Inclusion: The provision of affordable and accessible financial services to individuals and businesses, particularly those underserved by traditional banking systems.
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SMEs: Small and Medium Enterprises, typically characterized by a limited workforce and revenue base, contributing significantly to economic growth.
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Bank of Industry (BoI): A Nigerian development finance institution focused on providing financial support to businesses, particularly SMEs.
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