Financing Preferences of Micro, Small and Medium Enterprises: An Empirical Research of Surat District

Rubinabibi Farukh Shaikh, Research Scholar; Farida Rusi Mandviwala, Assistant Professor

doi:10.21844/smsjei.v12i01.30009

Rubinabibi Farukh Shaikh, Research Scholar SPB English Medium College of Commerce, V. T. Choksi College Campus, Near Lal Bungalow, Athwalines, Surat, Gujarat, India
Farida Rusi Mandviwala, Assistant Professor SPB English Medium College of Commerce, V. T. Choksi College Campus, Near Lal Bungalow, Athwalines, Surat, Gujarat, India

DOI: https://doi.org/10.21844/smsjei.v12i01.30009

Keywords: Financing preferences of MSME, Firm characteristics, Pecking order theory, Surat

Abstract

The Micro, Small and Medium Enterprises (MSME) plays an increasingly vital role in many economies,
particularly in developing economies, highlighting the need for greater understanding of the financing
behaviour of MSMEs. Financing behaviour here means the preferences of MSME owners in sourcing their
funds, whether through personal investment or external credit.
This research aims to analyse the financing preferences of MSME through pecking order theory and to
examine does there exists any association between the financing preferences of MSME, firm attributes and
owner characteristics. Empirical data were collected from MSME owners of Surat district using a structured
questionnaire. The data is analysed using descriptive and inferential statistics, including the Chi-square test.
The findings indicate that MSME owners adhere to the pecking order theory, but no relationship was found
between financing preferences and firm or owner characteristics.
These findings and insights of the study will help policymakers to develop tailored financial frameworks to
enhance the sustainability and growth of MSMEs.