Indian MSMEs amidst the COVID-19 Pandemic: Firm Characteristics and Access to Finance

Abstract

The importance of Micro, Small, and Medium Enterprises (MSMEs) in economic development and their access to finance post-COVID-19 has been highlighted in this study. The availability of finance is a critical factor for MSMEs to flourish, and they are mostly severely affected by the economic recession. The purpose of this study was to ascertain how the firm-specific factors such as Location, Industry, Size, Age, Ownership, Collaterals, and Business information affect their access to finance in India. This study used a survey to collect primary data from 200 MSMEs in India. Descriptive and logistic regression analysis was used to analyze the data. Results show that firms with collateral, larger and older firms, and private limited firms are less likely to face problems in raising finance, while service firms are more likely to face problems in raising finance. The results from this study will add to the understanding of the financing problems faced by MSMEs in India. The study recommends that firm attributes are important for accessing finance and help policymakers and researchers develop new strategies and policies to support the financing of MSMEs in India.   Received: 23 September 2021 / Accepted: 7 March 2022 / Published: 5 May 2022