Informal Financial Institutions and Small and Medium Scale Enterprises Performance in Akoko South West Local Government, Ondo State

Though the provision of finance for small and medium scale enterprises has been vested on the formal financial institutions like commercial banks and microfinance institutions, focus has shifted from these institutions to informal institutions in the recent years. This study investigated the effect of informal financial institutions and small and medium scale enterprises (SMEs) performance in Akoko South West Local Government Area of Ondo State. Two hundred (200) copies of the questionnaires were administered using simple random sampling technique to. Multiple regression model was adopted to analyze the data. The result showed that credit from family and friends and credit from money lenders had negative effect on the growth of small and medium scale enterprises with coefficients of -0.124 and -0.363 respectively. Also, cooperative credit and credit from business angels had positive effect on the growth of SMEs with coefficients of 0.562 and 0.087 respectively. It was suggested thus, government should formulate easy and tax-free policies that will strengthen the informal financial institutions in order to increase the availability of credit to SMEs in Akoko South West Local Government Area of Ondo State in particular and Nigeria as a whole.