Effect of Financial Inclusion on the Performance of Small and Medium Scale Enterprises in Ondo State

Abstract: This study investigates the effect of financial inclusion on performance of Small and Medium Scale Enterprises in Ondo State. A quantitative survey research design was employed. The population for the study comprised of all registered SMEs in Ondo State, Nigeria. The sample size used for this study was determined using the Taro Yamane (1967) formula for finite populations. The study utilized 300 SMEs as sample size across Ondo State using a combination of stratified random sampling and purposive sampling was used.  Data were collected using a structured questionnaire and were coded and analyzed using the Statistical Package for the Social Sciences (SPSS v30). Multiple regression analysis was used to test the study’s hypotheses. The result shows that financial inclusion, measured through access to formal finance and usage of financial services, does not significantly predict SME performance. The study also found that business environment (β = 0.145, p = 0.016) and education level of the entrepreneur (β = 0.150, p = 0.010) significantly influence SME performance. Similarly, owners or managers with higher education levels may better navigate financial management, marketing, and operational decisions, enhancing performance. These findings reinforce the multidimensional nature of SME success, highlighting that human capital and environmental factors can moderate or enhance the effects of financial inclusion. The study therefore recommends that Training programs targeting SME owners, especially those with lower educational backgrounds, can enhance managerial and financial decision-making skills, thereby improving business outcomes

Financial inclusion, Performance and Small and Medium Scale Enterprises

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