Evaluating the Impact of Bank Consolidation on SMEs Financing in Nigeria: The Emerging Roles of AI and Fintech Innovation
Abstract
Bank consolidation in Nigeria has significantly reshaped the financial landscape, with notable implications for credit access and financial inclusion. While consolidation policies aim to strengthen the banking sector, they have inadvertently reduced the availability of relationship-based lending—particularly for small and medium enterprises (SMEs), which are crucial to Nigeria’s economic development. At the same time, emerging financial technologies such as artificial intelligence (AI) and fintech innovations are transforming traditional banking by introducing alternative credit scoring systems, digital lending platforms, and real-time financial services. This study evaluates the impact of bank consolidation on SME financing in Nigeria and examines how AI and fintech innovations are moderating this relationship. Data were sources from the Central Bank of Nigeria, financial statements and annual reports of Nigerian banks, government publications on SME financing policies, and relevant academic journals, spanning 2008 to 2023. The study employs multiple independent variables (CAR, NPL, CIR, MSS), regression analysis to analyze the relationship between these variables and SMEs as the dependent variable. The study employs multiple independent variables (CAR, NPL, CIR, MSS), regression analysis to analyze the relationship between these variables and SMEs as the dependent variable. The findings are expected to reveal whether technological innovations can offset the negative consequences of bank consolidation on SME lending, and to what extent AI and fintech can improve credit allocation in Nigeria’s evolving financial system. This study contributes to the literature on financial innovation, banking reform, and SME development, offering policy recommendations for creating a more inclusive, tech-enabled financial sector.
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