Analysis of the effect of financing on profitability of Small and Medium Enterprises (SMEs) in Nigeria: Lagos state Outlook

This study empirically analysed the effect of financing on the profitability of Small and Medium Enterprises in Lagos State. The study concentrated on different sources of finance available to Small and Medium Enterprises, and also determined the effect of financing on profitability of Small and Medium Enterprise. The descriptive statistics used were tables and percentages. Spearman's rank correlation coefficient and multivariate analysis of variance and covariance (MANOVA) were employed to analyze data through STATA 11 version. The results showed that finance and revenue generated is weakly but positively correlated at 0.181, the relationship between finance and Profitability is also weakly but positively correlated at 0.048. Also, 1% increases in finance increases the rate of profitability in small and medium by 0.33%. Following the outcome of this study, it is therefore concluded that that there is a strong positive relationship between finance and small and medium profitability in Nigeria. Increasing in finance of small and medium enterprises is directly correlated to the level of profitability in small and medium enterprises. It is now recommended that Banks and others financial institutions should always make loans available to small and medium enterprises with the barest of interest rates in order to boost their profitability which will invariably trigger employment opportunities in Nigeria.