THE EFFECTS OF MICRO FINANCE BANKS IN MOBILIZATION OF RURAL SAVINGS IN ANAMBRA STATE: A CASE STUDY FIVE SELECTED MICROFINANCE BANKS IN AGUATA/ORUMBA NORTH LOCAL GOVERNMENT AREA

THE EFFECTS OF MICRO FINANCE BANKS IN MOBILIZATION OF RURAL SAVINGS IN ANAMBRA STATE: A CASE STUDY FIVE SELECTED MICROFINANCE BANKS IN AGUATA/ORUMBA NORTH LOCAL GOVERNMENT AREA

ABSTRACT

The study investigated the effects of micro finance banks in mobilization of rural savings in Anambra state: a case study five selected microfinance banks in Aguata/Orumba north local government area. The variables of interest rate, Liquidity ratio, lending rate and rate of unemployment were regressed on small and medium industry’s profitability (PFT). Econometric techniques, including Augmented Dicker Fuller and Philip Perron tests for unit roots, Johansson cointegration for long run relationship and ordinary least square (OLS). The result of the unit root indicates that all the variables attained stationarity at 1st difference. Again, the cointegration result suggests the existence of a long run relationship among the variables at 5% level of significance. The result of the study indicates that Liquidity ratios and Lending rate have positive and significant effect on small and medium industry’s profitability while Interest rate and Unemployment has negative and insignificant effect on the bank profitability. The study thus concludes that microfinance bank have positive effect on the growth of small and medium industry in Nigeria, The study recommends that’s Policy makers should focus on maintaining and ensuring interest rate stability. There should be an adequate maintenance of liquidity to ensure efficiency in performance. A reduction in the prime lending rate to investors so as to encourage investors to borrow more and increase investment.