ABSTRACT

This research study centers on the role of Micro Finance Banks in a developing economy. Micro Finance Banks are agents of economic development as they provide financial services such as savings, loan domestic fund transfer and other financial services that the economically active poor, micro, small and medium enterprises needed to conduct or expand their businesses. One of the major problem on the role of Microfinance Banks in Nigerian is inefficient and ineffective provision of financial services to the economically active poor, small and medium enterprises and the amount of fund accessed to hem has not being able to elevate them to a higher position. To solve the research problem secondary data were collected. The research instrument used in collecting the data was a written request (Application) of Umuchukwu Microfinance Bank sectoral Analysis of loans and advances to all identified priority sectors of the economy. In analyzing and presenting data collected, the least square method was used. The hypotheses were tested using the t-statistics. Data analysis and interpretation gave the following findings: The proportion of lands allocated to other sectors excluding Agriculture and Petty trade is large enough to enhance their economic activities. Thus resulting to economic development. It is also discovered that loans accessible to Agriculture and loans for petty trade are not adequate to enhance their economic activities and productivities. Hence the loans becomes a liability to them instead of an asset which will help grow/expand their business operations, thus leading to rural economic development. Based on finding, the researcher recommends that: Micro Finance Banks should increase the proportion of loans allocated to Agriculture and Petty trade. Thus enhancing their business operations and productivity. The momentum of the Micro Finance Banks should be sustained and scheme should be properly managed for Micro Finance Development goals of eradicating poverty by 2015. In order to achieve the developmental objective of micro Finance Banks in a developing economy (Nigeria). The recommendation in this research work should be strictly carried out.