IOSR Journal of Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 11, Issue 2 Ser. VI (Mar – Apr 2020), PP 37-47 www.iosrjournals.org DOI: 10.9790/5933-1102063747 www.iosrjournals.org 37 | Page Effect of Business Credit Availability on SMES Growth of Selected Small and Medium Enterprises in Southwest, Nigeria 1 Fasola, I. O., 2 Akinlabi, B. H., (Ph.D.) & 3 Makinde, G. O.(Ph.D.) 1,2&3 Department of Business Administration and Marketing, Babcock University, Illisan-Remo, Ogun State, Nigeria Correspondence Author: Fasola, I. O Abstract: The growth of small and medium enterprises (SMEs) is of interest to all countries in the world. Small and medium enterprises are acknowledged as the drivers of social and economic development due to their significant roles in employment generation, income generation, growth of gross domestic product (GDP), and entrepreneurship. Despite these immense contributions of SMEs, small and medium scale businesses in Nigeria have been beleaguered with incessant poor growth such as declining profitability, poor output, low market share, stunted revenue growth, and low sales due to credit non-availability to SMEs operations in Nigeria. The study examined the effect of credit availability measures (information asymmetry, bank density, and credit rationing) have no significant effect on the growth of selected small and medium enterprises in Southwest, Nigeria. The study employed multiple regression method of analysis through Partial Least Squares Structural Equation Modelling (PLS-SEM) for hypothesis testing. Finding revealed that business credit availability measures (information asymmetry, bank density, and credit rationing) significantly affect SMEs growth of selected small and medium enterprises in Southwest, Nigeria. The study concludes thatbusiness credit availability measures affect SMEs growth of selected small and medium enterprises in Southwest, Nigeria. It is therefore recommends that SMEs owners should focus on and understand deposit money banks strategies such as information asymmetry, bank density and credit rationing so as to continuously record growth in their business activities. Keywords: Business Credit Availability, information asymmetry, bank density, credit rationing and SMEs growth --------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 10-04-2020 Date of Acceptance: 24-04-2020 --------------------------------------------------------------------------------------------------------------------------------------- I. Introduction The growth of small and medium enterprises (SMEs) industry is of interest to all countries in the worldas the industry significantly contributes to economic activities, employment generation, and national development of any economies across the globe. Ariguzo, Egwuakhe and Adefulu (2019) have posited that SMEs business performance ascent has remained a universal dilemma which has been generating a vast amount of argument among practitioners, researchers, and policy makers. Kamrul (2019) has argued that for any economies to achieve sound and greater economic activities, continuous SMEs growth is the answer and barometer to achieve economy income generation and growth.Despite enormous contributions of SMEs towards an economy, small and medium scale businesses have been characterisedwith incessant declined in growth in terms of sales and revenue especially in developing countries. SMEs are due to the challenges of credit availability from financial intermediaries. In economies of developedcountries such as Japan, United States, China and Russia, SMEs have experienced deterioration in performances (World Bank Report, 2018). According to Gumel (2017), small and medium scale businesses are faced with numerous challenges that resulted in their failure. Likewise, it is evident that most of SMEs in emerging economies in the Europe faced the challenges of credit non-availability, thus daunting their growth and reducing their targeted contributions to economic activities. The issue of declined in SMEs growth has been a trend in the world over, Africa is not an exception, and it requires adequate availability of business credit. However, lack of credit availability to the SMEs sector is universally recognised in developing countries like Africa economies. In Africa, it is agreed among researchers that inability to access credit remains a major hindrance to SMEs performance (Ajayi, 2019; Makanga& Paul, 2017; Aminu, 2018). In Nigeria, in spite of dominance and significant contributions of SMEs to economic activities and development recorded in developed countries, SMEs in Nigeria perform below expectation as low as one percent (1%) to GDP and continuous decline in growth compared with countries like Indonesia, Thailand, and India where SMEs contribute almost 40 percent (Entrepreneurship Outlook, 2019).