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The raising of capital (in the capital markets)

The transfer of risk (in the derivatives markets)

International trade (in the currency markets)

The financial market matches those who want to buy with those who want to see. Money market is one component of the financial market for asset involved in short term borrowing and lending usually not exceeding one year. Trades in the money market involve T-bills, Commercial Papers (CP), bankers’ acceptance, Certificate of Deposits (CD) and both mortgage and asset backed securities.

4.5.3 Banks

The systems of banking in Africa are not properly adapted to lending to SMEs with some exceptions. This makes financing a more difficult approach, hence making financing more flexible would be a welcoming help (Bercy, 2005). All over the world the importance of promoting SMEs as a channel of growth and industrialization has been recognized. One of the vital roles of the banks is to devise a way to creating loan package and providing loans to small business that are otherwise not properly informed. (Berger, Klapper and Udell 2001). Conversely credit provision to small borrowers may be affected by a number of factors. Bank consolidation is one of the major factor affecting credit to small borrowers. The creation of mega bank suggests that large institution devote less of their asset proportion to lending to small business than smaller less complex institution. ( Emeni and Okafor, 2008) .These mega banks may be oriented towards transaction lending and providing capital markets services to large corporate clients. These institutions often have their headquarters in business metropolis far away city centre that are a great distant from small borrower. Ogujiuba, Ohuche and Adenuga, 2004)

Banks in Nigeria although reported to being highly liquid and wanting to make loans available, they are usually put off by the uncertain nature of SMEs. And since these banks do not provide the necessary funds required to start a business, run the business and keeps it going, SMEs tend to rely on personal assets for their working capital. This reliance on personal funds makes it very difficult to operate at optimum capacity, increase output and make sales. It also limits investment to develop, expand operation or even improve technology. This risk on bank not lending is attributed to lack of information on SMEs true situation in terms of finance and their performance ability to repay loans both principal and interest. And since the judicial system is not reliable, banks cannot enforce contracts, hence making business environment generally risk prone and uncertain.(Ogujiuba, Ohuche and Adenuga, 2004)

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