Institutional Credit and Growth Nexus of SMEs in Nigeria: The Banking Sector Perspective IWEDI, Marshal Department of Banking and Finance, Rivers State University, Nkpolu-Oroworukwo Port Harcourt, Nigeria E-mail: iwedimarshal@yahoo.com Abstract: The paper is on institutional credit and growth nexus of SMEs in Nigeria; the banking sector perspective. Time series date spanning the period of forty five (45) years was sourced from CBN statistical bulletin for 2019. The SMEGDP shows a rising trend and recorded major peaks in 2010, 2011, 2014. The commercial bank credit to SMEs (CBC) exhibit unstable trend with remarkable peak in 2002 and 2017. Microfinance bank credit to SMEs also shows an unstable trend. The regression result above shows that commercial bank credit to small and medium enterprises (CBC) and banking system lending rate (BSL) have a negative impact on SMEs growth in Nigeria. Also, there is a direct/positive relationship between microfinance credit to SMEs (MFC) and SMEs growth which implies that, unit increase in MFC will lead to 5.550403 unit increases in SMEs growth in Nigeria. We conclude that institutional credit to SMEs is determinant variable of SMEs growth in Nigeria. Based on the findings of this study, it is recommended that, banks should increase their lending activities to small and medium enterprises in Nigeria. 1. INTRODUCTION SMEs represent a large and economically important sector in emerging market. As a sector they are central to economic development and growth of Nigeria. For SMEs to grow and make positive impact on the economy, they need access to finance which of course has historically been severely constrained. A thriving SMEs sector is commonly considered a sign of a thriving economy of a whole. According to Nigeria Bureau of statistics (NBS) in 2016 SMEs in Nigeria have contributed about 48% of the National GDP, account for about 50% of JOURNAL OF DEVELOPMENT ECONOMICS AND FINANCE Vol. 1, No. 2, 2020, 289-301 © ARF India. All Right Reserved URL : www.arfjournals.com Article History Received : 13 July 2020 Revised : 17 July 2020 Accepted : 24 August 2020 Published : 30 December 2020 Key words Commercial bank credit, Microfinance bank credit, SMEs, Nigeria