EFFECT OF FINANCIAL INNOVATION ON CREDIT ACCESSIBILITY BY SMALL AND MEDIUM SCALE ENTERPRISES (SMES) IN EDO STATE, NIGERIA

This study examined the effect of financial innovation on credit accessibility of Small and Medium Scale Enterprises (SMEs) in Edo State, Nigeria. Financial innovation was proxied by digital payment platforms, fintech lending, agency banking services, and digital credit information systems, while credit accessibility served as the dependent variable. The study adopted a descriptive survey research design and relied on primary data collected through structured questionnaires administered to SME owners and managers across Edo State. Data collected were analyzed using descriptive statistics and Ordinary Least Squares regression technique. The findings revealed that digital payment platforms have a positive and statistically significant effect on credit accessibility of SMEs. Fintech lending was also found to significantly enhance SMEs’ access to credit, indicating that technology-driven lending platforms provide alternative financing opportunities for small businesses. In addition, agency banking services exhibited a positive and significant effect on credit accessibility, suggesting that the expansion of agent banking improves SMEs’ proximity to financial services and facilitates access to credit. However, digital credit information systems showed a positive but statistically insignificant effect on credit accessibility at the 5 percent level, indicating limited effectiveness of credit information systems among SMEs in the study area. The joint effect of the financial innovation variables was statistically significant, confirming that financial innovation plays a critical role in improving SME credit accessibility in Edo State. The study concluded that financial innovation significantly enhances access to credit for SMEs by reducing transaction costs, improving information flow, and expanding the reach of financial services. It was recommended that SME owners intensify the use of digital payment platforms, fintech firms expand SME-focused lending products, and policymakers strengthen agency banking frameworks and credit information systems to further improve access to finance. The study contributes to the literature by providing state-level empirical evidence on the role of financial innovation in SME financing in Nigeria.