EVALUATING THE INFLUENCE OF TAX INCENTIVES ON MICRO-CREDIT INSTITUTIONS AND THEIR IMPACT ON SME FINANCING INILORIN, KWARA STATE

Abstract

The study examined the influence of tax incentives on micro-credit institutions and their impact on SME financing in Ilorin, Kwara State. A descriptive survey and documentary research design was adopted, targeting management staff of licensed microfinance banks and registered SME owners operating within the study area. From an estimated population of 3,262 respondents, a sample size of 400 was
determined using the Taro Yamane technique, while simple random sampling ensured adequate representation. Data were obtained from both primary and secondary sources, with structured questionnaires capturing information on tax incentive policies, institutional performance, and SME access to finance, complemented by official documents, government publications, and relevant academic literature. Quantitative data were analysed using descriptive statistics such as frequencies and
percentages, alongside regression analysis to test the study hypotheses. The findings revealed that tax incentives exert a statistically significant and positive effect on the performance of micro-credit institutions, and that improved institutional performance significantly enhances access to financing for SMEs in Ilorin. The study therefore concludes that well-designed tax incentive policies constitute an effective instrument
for strengthening micro-credit institutions and expanding sustainable financing opportunities for SMEs.