Monetary Policy and Small and Medium Enterprises’ Performance in Selected West African Countries

W.A. Isola
E.P. Mesagan
JEL codes: 
E43 - Interest Rates: Determination, Term Structure, and Effects, E52 - Monetary Policy.
The study focussed on the effect of monetary policy on the performance of Small and Medium Enterprises (SMEs) in three West African countries, Nigeria, Ghana and Gambia over the period of 1981 to 2016. Variables like credit to the private sector, interest rate, inflation rate and exchange rate were employed as explanatory variables, while SMEs output was employed as dependent variable. It was observed that credit to the private sector and inflation rate have negative effect on SMEs output, while exchange rate and interest rate have negative effect on SMEs output over the period. Among all the monetary policy indicators, only interest rate had direct impact on the performance of SMEs in Ghana while exchange rate reported positive impact on SMEs output in Gambia. Consequently, it is concluded that monetary policy in the three countries had not been favourable to the performance of the SMEs sector in West African countries.
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