MODERATING EFFECT OF TRUST ON RELATIONSHIP BETWEEN LOAN REPAYMENT PRACTICES AND SMEs PERFORMANCE IN NORTH-WESTERN, NIGERIA
Alfa Henson , Prof. Mukhtar Shehu Aliyu and Prof. Talatu M. Barwa
Volume 3 Issue 3
Abstract
Low performance of Small and Medium Enterprises in Nigeria today dominates discussions on entrepreneurs and entire private and public sectors in Nigeria. This study aimed to examine the moderating effect of trust on the relationship between loan repayment practice and the performance of small and medium enterprises in the Northwest zone, Nigeria. A cross-sectional survey design was used for the study and the unit of analysis is the organization (SMEs performance) and the owners/managers were the respondents. Proportionate stratified random sampling technique used to select five hundred and ninety-two (592) respondents from eleven thousand seven hundred and thirty-one (11,731) registered SMEs in the North-Western geopolitical zone in Nigeria. Descriptive and inferential statistics were employed to analyse the data collected using Statistical Package for Social Science (SPSS) for Window Version 23. The Study ran multiple and hierarchical regression analysis to establish the relationships between financial management practices (FMP), debt management practices (DMP), financial literacy practices ( FL) and SMEs performance( )as well as the moderating effect of trust (TRT) . The study reveals that financial management practice (FMP) has a significant positive relationship with SMEs performance. On the other hand, the study finds no significance relationship between debt management practices and SMEs performance. The study also reveals a positive significant relationship between financial literacy (FL) and SMEs performance. In addition, trust (TRT) has significant moderation effect on financial management practice, debt management practice and financial literacy practice and SMEs performance. Based on the empirical findings, the current study has made contributions to the body of knowledge particularly in literature concerned with loan repayment practices and SMEs performance and moderation effect of trust. Finally, limitations, conclusion as well as recommendations and direction for future research were provided and discussed. Keywords: Loan Repayment Practices, SMEs, Performance, Trust, North-western Nigeria
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