Entrepreneurship Funding and Poverty Reduction: Assessing the Moderating Role of Interest Rate, Exchange Rate, and Consumer Price Index

Sandra Asinoye Uzuh¹
Okuji, Obinna Oreh²
Ewere Success Obieze³
Okwudili R. Ojeogwu⁴
Solomon Akintayo Ale⁵
Johnson I. Okoh^6
1Human Resource Development,
University of the West Indies, Jamaica
²Department of Financial Studies,
National Open University of Nigeria, Abuja
³Department of Business Administration,
University of Delta, Agbor
⁴General Studies Department,
Federal School of Statistics, Ibadan
⁵Bursary Dept., National Open University of Nigeria, Abuja
⁶Department of Financial Studies,
National Open University of Nigeria, Abuja
For correspondence, email: jokoh@noun.edu.ng

Abstract

This study examined the impact of bank entrepreneurship funding on poverty reduction in Nigeria while assessing the moderating effects of macroeconomic factors, including exchange rate, interest rate, and inflation (proxied by the Consumer Price Index, CPI). It employed an autoregressive distributed lag (ARDL) model on annual time series data from 1986 to 2022, sourced from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS). The findings revealed a significant inverse relationship between bank entrepreneurship funding and poverty rates, indicating that increased financial support for entrepreneurs contributed to poverty alleviation. However, macroeconomic conditions played a crucial role in shaping these effects. Specifically, high inflation and elevated interest rates exacerbated poverty by reducing real incomes and increasing borrowing costs, thereby constraining business growth. In contrast, a stable exchange rate and periods of economic expansion fostered a conducive environment for entrepreneurship and job creation, leading to poverty reduction. Despite these findings, the study acknowledged limitations such as data availability, potential endogeneity, and model specification constraints. It provided specific policy recommendations, emphasizing the need for financial institutions to enhance credit accessibility for entrepreneurs while ensuring macroeconomic stability through sound monetary and fiscal policies. By offering empirical insights into the intersection of finance, entrepreneurship, and poverty, this research informed policymakers and development practitioners on strategic interventions to drive inclusive economic growth in Nigeria.

Keywords: Entrepreneurship Funding, Poverty reduction, Consumer Price Index

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