The objective of the study is to examine the effect of fiscal policy on small and medium scale enterprises in Nigeria using annual time series data from Central Bank of Nigeria Statistical Bulletin for the period of 1994 to 2014. This investigation is imperative because of the failure of successive governments schemes aimed at ensuring adequate financing for Small and Medium Enterprises (SMEs) which has shown that the problem of SMEs in Nigeria is not limited to lack of long-term financing (Sanusi, 2003) and this situation has raises a serious concern about the issue of aligning the fiscal policy-planning to the specific requirements of a particular country’s growth need, as it has to balance both short-term and long-term impact of the policy. In an attempt to achieve the broad objective of this study, the study adopts the multiple regression econometric method of analysis. The ordinary least square (OLS) technique was used in the estimation of the model formulated to analyse the effect of fiscal policy on small and medium scale enterprises in Nigeria. The data for the analysis of the model were collected from Central Bank of Nigeria Statistical Bulletin for the period of 1994 to 2014. The result of the model was facilitated using the Econometric View (E-View). The result of the analysis shows clearly that at 5% level of significance government expenditure GEX and tax GTR exert a significant positive effect on small and medium scale enterprises output SMEO in Nigeria while the effect of inflation was not significant. The ARCH and GARCH result established the presence of volatility clustering–a period where large (small) changes in fiscal policy is followed by large (small) changes in small and medium enterprises output over a longer period. Among others, the study recommends the need for the encouragement of expansionary fiscal policies as they play vital role in the growth of the small and medium scale enterprises sub-sector in Nigeria.
TABLE OF CONTENTS
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Sources of Data and Methodology
1.7 Significance of the Study
1.8 Scope and Plan of the Study
CHAPTER TWO – LITERATURE REVIEW
2.1 Conceptual Review
2.1.1 The Concept of Fiscal policy
2.1.2 Fiscal Policy Instruments
2.1.3 Small and Medium Scale Enterprises.
2.1.4 Fiscal Policy and the Growth of SMEs
2.2 Theoretical Review
2.2.1 The Savers-Spenders Theory
2.2.2 Managerial Theory of Firms
2.2.3 Contingency Theory
2.3 Empirical Review
2.3.1 Evidence from Developed Countries
2.3.2 Evidence from Developing Countries
2.3.4 Evidence from Nigeria
2.4 Gap in Literature
CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction
3.2 Nature and Sources of Data
3.3 Restatement of Hypothesis
3.4 Model Specification
3.5 A priori Expectation
3.6 Decision Criteria
CHAPTER FOUR – PRESENTATION AND ANALYSIS OF DATA
4.1 Data Presentation
4.2 Presentation and Analysis of Result
4.3 Interpretation of result
4.4 Conclusion of Findings
CHAPTER FIVE -SUMMARY, CONCLUSION, AND RECOMMENDATIONS
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendations
APPENDIX
REFERENCES
