Access to Finance: Challenges Faced by Micro, Small, and Medium Enterprises in India

K. Rajamani; N.  Akbar Jan; A. K. Subramani; A.  Nirmal Raj

doi:10.5755/j01.ee.33.1.27998

Authors

K. Rajamani Department of Management Studies Mepco Schlenk Engineering College (Autonomous), India
N. Akbar Jan Faculty of HR & OB, ICFAI Business School (IBS), Hyderabad, ICFAI Foundation for Higher Education (IFHE), India
A. K. Subramani Department of Management Studies, St. Peter's College of Engineering and Technology, India
A. Nirmal Raj Department of Management Studies, Saveetha Engineering College (Autonomous), India

DOI:

https://doi.org/10.5755/j01.ee.33.1.27998

Keywords:

MSME, Firm Attributes, Access to Finance, Sources of Finance, Financial Obstacles, Performance, Access to Credit

Abstract

Access to finance plays a major role in the entrepreneurship development and economic growth of any country. It encourages new entrepreneurial initiatives. Timely access to finance sustains the survival and growth of micro, small, and medium enterprises (MSMEs). The purpose of this paper is to explore the challenges of access to finance faced by the MSMEs and to analyze their impact on their business performance. The survey was conducted in 400 MSMEs from various industrial clusters across India. The samples were selected using the quota sampling technique. The conceptual framework was developed and tested using the structural equation model (SEM). Results show that firm attributes, sources of finance, and the life cycle of an MSME have a significant positive impact on its access to finance, whereas financial obstacles have a negative impact that prevents the growth of MSME and affects the economic growth of the nation.

Author Biographies

K. Rajamani , Department of Management Studies Mepco Schlenk Engineering College (Autonomous), India

K. Rajamani is Associate Professor of Management Studies at Mepco Schlenk Engineering College, Sivakasi. Her academic qualification includes MBA (Finance), M.Phil in Management and Ph.D. in Business Administration. She also completed Post-Doctoral research on “Finance for Micro, Small and Medium Enterprises – Sources and Challenges” at the State Bank Institute of Leadership (Apex institute of State Bank of India). Her areas of interest are financial services, capital market, corporate finance and international finance. She has published over twenty research papers in various national & international refereed journals. She has also presented her research papers at both national and international Conferences.

N. Akbar Jan, Faculty of HR & OB, ICFAI Business School (IBS), Hyderabad, ICFAI Foundation for Higher Education (IFHE), India

N. Akbar Jan is working as an Assistant Professor in the HR&OB Department, ICFAI Business School, The ICFAI Foundation for Higher Education, Hyderabad, India. He has completed his PhD in Management studies from Anna University, Chennai, India. He has 18 years of teaching experience and five years of industrial experience. He has published 17 articles in international journals (including 12 papers in Scopus indexed journals), and presented several papers at international and national conferences. He is also a recognized research supervisor of Anna University, Chennai. His area of research interest is human resource management and operations management. He has received ‘Teaching and Research Excellence Award’ from Grabs charitable trust, India.

A. K. Subramani, Department of Management Studies, St. Peter's College of Engineering and Technology, India

A.K. Subramani is working as an Associate Professor and Head in St. Peter’s College of Engineering and Technology, Chennai, India. He has completed PhD in Business Administration in Manonmaniam Sundaranar University, Tirunelveli, India. He has 15 years of teaching experience and published 53 articles in international journals (including 10 in Scopus indexed journals). He presented many papers in international conferences and national conferences. His area of research interests are human resource management, organisational behaviour and operations management.

A. Nirmal Raj, Department of Management Studies, Saveetha Engineering College (Autonomous), India

A. Nirmal Raj is a Professor of Management Studies at Saveetha Engineering College, Thandalam. His academic qualification includes MBA, M.Phil in Management and Ph.D. in Business Administration. Presented papers in national and international conferences and chaired various sessions of conferences. A trained Entrepreneurship ecology builder with a vigour and spirit to handhold start-ups adding fuel is the Fund received from Department of Science and Technology (DST) worth 2.87 crores to set up New Gen Innovation and Entrepreneurship Development Centre (IEDC).