Abstract

This study examined the effect of small and medium scale enterprise financing on sustainable economic development in Nigeria. It utilized secondary data extracted from the Central Bank of Nigeria (CBN) statistical bulletins, National Bureau of Statistic (NBS) reports and publications. 
The Human Development Index (HDI) was used as the dependent variable to measure economic development while the independent variables are contribution of SMEs to GDP and deposit money banks’ lending to SMEs. The study made use of the Vector Autoregression Estimates in the analysis. The result showed that contribution of SMEs to GDP have positive effect on HDI while deposit money banks’ lending to SMEs have negative effect on HDI. The cointegration test also showed a long-run relationship between variables tested. The study suggested among other recommendations that relevant federal government agencies should improve on funding of SMEs, this will enable them increase in productivity.