Issues of Credit Availability in Indian MSMEs; A Financing Deficit Model Approach
DOI:
https://doi.org/10.54741/MJAR/5.6.2025.272Keywords:
MSMEs, credit constraints, financing deficit model, working capital, leverage, banking sector characteristicsAbstract
This study examines the credit constraints faced by Micro, Small, and Medium Enterprises (MSMEs) in India, highlighting the limitations of standard models developed for larger firms in Western markets. We propose an augmented model, the Financing Deficit Model, which incorporates working capital, gross fixed asset formation, and leverage as drivers of credit constraints. Our findings suggest that this model is robust for ascertaining credit constraints in Indian MSMEs. The study also explores the factors affecting access to finance, including business size and age, profitability, and banking sector characteristics. The results have implications for policymakers and financial institutions seeking to improve credit availability to MSMEs in India.
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References
Vyas DK. (2013). Growth and performance of Indian Micro, Small and Medium Enterprises (MSMEs) in the postglobalization period. Paripex Indian Journal of Research, 3(4).
Agarwal A, & Gupta SK. (2013). A study on various schemes for MSMEs: With special reference to SIDBI. International Journal of Advances Research in Management and Social Science.
Kushalakshi, & Raghurama A. commercial banks financing MSMEs in India. Paripex Indian Journal of Research. Available at: https://www.worldwidejournals.com/paripex
Pradhan Mantri MUDRA Yojana (PMMY). Official website and annual reports on loan disbursements. Available at: https://www.mudra.org.in
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Scheme details and performance reports. Available at: https://www.cgtmse.in
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Copyright (c) 2025 Ishaan Bhatter, Soumyatanu Adhikary
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Research Articles in 'Management Journal for Advanced Research' are Open Access articles published under the Creative Commons CC BY License Creative Commons Attribution 4.0 International License http://creativecommons.org/licenses/by/4.0/. This license allows you to share – copy and redistribute the material in any medium or format. Adapt – remix, transform, and build upon the material for any purpose, even commercially.
