49 Journal of Accounting, Business and Finance Research ISSN: 2521-3830 Vol. 4, No. 2, pp. 49-55, 2018 DOI: 10.20448/2002.42.49.55 Commercial Bank Lending to Small and Medium Scale Enterprises and Nigeria Economy Clement Olatunji OLAOYE 1 Ayodeji Quadri ADEDEJI 2 Rafiat Abiodun AYENI-AGBAJE 3 1,2,3 Department of Accounting, Faculty of Management Sciences Ekiti State University, Ado Ekiti, Nigeria. Abstract The study examined the commercial bank lending to Small and Medium Scale Enterprises and Nigeria economy over a period of twenty years, spanning from 1998 to 2017. Specifically the study analyzed the effect of Average commercial bank lending rate, commercial bank loans and inflation rate to SMEs growth on Nigeria economy, and also the causal relationship between explanatory variables and Nigeria economy measured in terms of GDP. The study made used of secondary data sourced from the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics for the period under study. Data collated were analyzed with descriptive analysis, correlation analysis, ordinary least squares regression analysis, and Granger causality analysis. The findings revealed that commercial bank loans to SMEs (CBLSMES) had a negative and insignificant impact on a gross domestic product with a coefficient estimate of -1.015926 (p=0.0167 < 0.05). Average commercial bank lending rate to SMEs (ACBLRSMES) had a negative and insignificant impact on a gross domestic product with a coefficient estimate of -1911.581 (p=0.6178 > 0.05). Meanwhile, the study revealed that inflation rate (IFTRATE) exert an insignificant positive impact on a gross domestic product with a coefficient estimate of 1833.262 (p=0.2400> 0.05). The result also revealed that there is no causal relationship between exploratory variables (commercial bank loans to SMEs, Average commercial bank lending rate to SMEs, inflation rate) and Nigeria economy measured in terms of GDP and while ACBLRSMES and CBLSMES has a causal relationship to SMEs. The study recommend that in order to address Nigeria government should recognize the impact of SMEs in Nigeria economy and attach importance to the growth of SMEs by encouraging banks to assist with loans because it constitutes a major tool in boosting employment in the country. Keywords: Small and medium scale Enterprises, Nigeria economy, Inflation rate, Average commercial bank lending rate, SMEs Growth, commercial bank loans. Licensed: This work is licensed under a Creative Commons Attribution 4.0 License. Publisher: Scientific Publishing Institute Funding: This study received no specific financial support. Competing Interests: The authors declare that they have no competing interests. 1. Introduction In many nations today, the pace of development in the economy has been slowed especially in the underdeveloped and the developed countries but over the past 15 years, Africa has experienced sustained economic growth with the way growth rates frequently exceeds 5% per annum. The developed economies experiences are in relation to the parts played by SMEs which strengthens the relevance of SMEs placing excessive emphasis among the developing countries. However, the general economic context is now turning less favorable, especially with oil and mineral exporting countries growth slowing down. This growth generally is expected to continue but at a slower pace. In this changing climate, it is important to look at the growth and distinguish those that can sustain (Onakoya, Fasanya, & Abdulrahman, 2013).