The Effect of Credit Accessibility on Small-Scale Property Investment in Gombe State
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Background of the Study
Access to credit is a key determinant of investment activities, particularly in sectors such as real estate, where capital requirements are typically high. Small-scale property investors, who often lack the large financial backing of larger developers, face significant challenges in financing property investments. Credit accessibility, or the ability to secure loans or other forms of financial support, is crucial for these investors to expand their portfolios and participate in property development (Fola & Samuel, 2024). In Nigeria, where the real estate market is expanding rapidly, credit plays an important role in bridging the financing gap for small-scale property investors. However, small-scale investors in states like Gombe often face difficulties in accessing financing due to high-interest rates, stringent lending conditions, and limited access to formal financial institutions (Idris et al., 2023).
Gombe State, located in northeastern Nigeria, is characterized by a growing urban population and increasing demand for housing and commercial properties. However, the property market in the state is still in its developmental phase compared to more established markets in cities like Lagos or Abuja (Aminu & Yakubu, 2024). Small-scale property investors in Gombe play a vital role in meeting local housing demands but are constrained by limited access to credit. Research suggests that access to affordable credit is a key factor influencing the ability of small-scale investors to engage in property development (Tijani & Olajide, 2023). Despite the critical role of these investors, there is limited research on the specific challenges they face in Gombe, especially regarding credit accessibility and its effect on their investment decisions.
The impact of credit on small-scale property investment is multifaceted, affecting everything from project financing and construction costs to profitability and long-term sustainability. If credit accessibility can be improved, small-scale property investors in Gombe could contribute more effectively to the housing sector, enhancing supply and addressing affordability concerns. Therefore, this study aims to explore the relationship between credit accessibility and the success of small-scale property investments in Gombe State.
Statement of the Problem
Small-scale property investors in Gombe State face significant barriers to accessing credit, which hinders their ability to invest in and develop real estate projects. Although the need for affordable housing is growing in the state, the inability of many investors to secure financing limits their capacity to meet demand. Additionally, high interest rates, collateral requirements, and the restrictive lending practices of financial institutions exacerbate the challenges faced by small-scale investors. This study seeks to investigate how the accessibility of credit affects the success and growth of small-scale property investment in Gombe, addressing both the barriers to financing and the potential solutions that could enhance investor participation in the real estate market.
Without an in-depth understanding of the role of credit in small-scale property investments, stakeholders such as policymakers, financial institutions, and real estate developers may be unable to design appropriate strategies to improve access to financing for this key sector. This research will fill this gap by exploring the effects of credit accessibility on property investment decisions and outcomes in Gombe State.
Objectives of the Study
- To examine the effect of credit accessibility on small-scale property investment decisions in Gombe State.
- To identify the challenges faced by small-scale property investors in accessing credit in Gombe.
- To explore potential solutions to improve credit accessibility for small-scale property investors in Gombe.
Research Questions
- How does credit accessibility affect small-scale property investment decisions in Gombe State?
- What challenges do small-scale property investors in Gombe face in accessing credit?
- What solutions can be implemented to improve credit accessibility for small-scale property investors in Gombe?
Research Hypotheses
- There is a significant relationship between credit accessibility and small-scale property investment in Gombe State.
- Small-scale property investors in Gombe face significant challenges in accessing credit from formal financial institutions.
- Improving credit accessibility will lead to increased small-scale property investment in Gombe State.
Scope and Limitations of the Study
The study will focus on small-scale property investors in Gombe State, including those involved in residential and commercial property investments. The research will examine their access to credit, the challenges they face, and how credit availability affects their investment decisions. Limitations may include the willingness of investors to share financial information or the availability of relevant data on credit accessibility. The study may also be limited by the scope of financial institutions included, as smaller lenders or informal sources of credit may not be fully captured.
Definitions of Terms
- Credit Accessibility: The ease with which individuals or businesses can obtain financial support, particularly loans, to fund investment activities.
- Small-Scale Property Investment: Investments in property development and real estate with relatively low capital compared to large-scale projects, often undertaken by individual or small business investors.
- Financial Institutions: Organizations that provide financial services, including banks, microfinance institutions, and other lenders.
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