Small Business Loan Decisions: A Survey of Criteria in Japan and Nigeria

Abstract

SUNDAY I. OWUALAH has recently been a doctoral student in the Faculty of Business Administration, Ritsumeikan University, Kyoto, Japan, but has now returned to Nigeria as a lecturer in the Department of Finance at the University of Lagos. This paper reports the results of a survey of small business loan decision criteria in two countries as very different stages of development. Japan and Nigeria present striking contrasts, not only terms of their levels of economic development but also in terms of socio-economic infrastructures enjoyed by their small businesses. On both counts Japan towers over Nigeria. Hence the perceptions of the banking institutions to small business lending in the former can be used to assess the perceptions of those in the latter. A major finding of this study is that although there is some degree of congruence on what banking institutions in both countries consider to be critical in their small business loan decisions, the observed divergences in their perceptions may be the consequence of institutional or promotional support inequalities between them.

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References

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5 This was the total number of commercial banks in Nigeria as at the end of March, 1986

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