An Empirical Study on Determinants of Loan Repayment Behaviour of SMEs Towards Commercial Banks

2022 ◽  
pp. 097084642110548
Author(s):  
M. Nandini ◽  
B. N. Shubha
Keyword(s):  
Commercial Banks ◽  
Small And Medium Enterprises ◽  
Loan Repayment ◽  
Research Article ◽  
Advanced Economies ◽  
Service Sectors ◽  
Catch Up ◽  
Growing Economy ◽  
Loan Defaults ◽  
Medium Enterprises

India, as a developing economy even after five decades of planning, still has a long way to catch up with the advanced economies of the globe. The goal may be distant, but surely, the time needed to reach can be reduced by accelerating the pace of development. One way of doing this is by the development of industrial and business ventures. There exists a positive relationship between the growth of an economy and the growth of small and medium enterprises (SMEs). SMEs play a vibrant role in the development of an economy. Access to the formal source of credit by entrepreneurs is essential in a growing economy. Lending to SMEs is a risky activity for the banks as repayment of these loans are less guaranteed. The research article attempts to analyse the factors influencing the loan repayment behaviour of SMEs towards commercial banks. Data are collected using the convenience method of sampling from 80 registered SMEs belonging to the manufacturing and service sectors in the Bangalore region, and data are analysed using statistical tools such as correlation and logit regression analysis, conclusions are drawn based on these findings. The study reveals that characteristics of loan and lender influence the repayment to the maximum extent. The findings are helpful for commercial banks in redesigning suitable policies and schemes to reduce loan defaults.

scholarly journals Factors Affecting Small and Medium Enterprises Success: An Exploratory Study

2013 ◽  
Vol 64 (3) ◽  
Author(s):  
Abdul Karim Kanaan Jebna ◽  
Ahmad Suhaimi Baharudin
Keyword(s):  
East Asia ◽  
Cash Flow ◽  
Exploratory Study ◽  
Business Performance ◽  
Small And Medium Enterprises ◽  
South East Asia ◽  
Factors Affecting ◽  
Competitor Orientation ◽  
Growing Economy ◽  
Medium Enterprises

Small and medium enterprises (SMEs) are the main contributor toward prospering the Malaysian economy [1]. Despite the fact that Malaysia is a fast growing economy in South-East Asia, death of SMEs is unavoidable. An exploratory study was conducted to investigate the factors that have an impact on business performance and success in Malaysia. Interviews with SMEs from different industries were conducted. Several factors were found to contribute to the success of business. The factors are classified into financial and non-financial determinants. These factors include customer satisfaction, service quality, experience, business expansion, competitor orientation, solving problems, cash flow, and the amount of sales and revenue. Building on these interviews, a discussion and conclusion have been provided.

scholarly journals COMMERCIAL BANKS AND THEIR EFFECT ON SMALL AND MEDIUM ENTERPRISES FINANCING IN RWANDA: A CASE STUDY OF KIGALI CITY AND SOUTHERN PROVINCE

AGROFOR ◽  
2021 ◽  
Vol 6 (1) ◽  
Author(s):  
Mutamuliza EULARIE ◽  
Giramata AURORE
Keyword(s):  
Financial Services ◽  
Commercial Banks ◽  
Small And Medium Enterprises ◽  
Financial Industry ◽  
Chi Square ◽  
Southern Province ◽  
Start Up ◽  
Chi Square Test ◽  
The Government ◽  
Medium Enterprises

Commercial Banks worldwide are identified to be one of the key players in the financial industry that have positively affected individuals involved in business, and the economy at large, through the functions they perform in the economy. However, inadequate financing in the activities of Small and Medium Enterprises (SMEs) is still the major constraint faced by people involved in business activities. Even though the Government of Rwanda has made effort to improve the accessibility to credit, entrepreneurs still have some challenges to access financial services in order to improve their businesses. The purpose of this research was to assess the contribution of commercial banks in financing SMEs in Rwanda. A sample of 60 SMEs was selected in Kigali and Southern Province of Rwanda. Data was collected from the respondents through a structured questionnaire. The collected data were analyzed using descriptive statistics such as frequencies and percentage distributions. A Pearson Chi-Square Test was used to analyze the relationship between commercial banks and SMEs in Rwanda. The results indicated that the main purposes of loan application were start-up capital, working capital and expansion of businesses. The results also revealed that there was positive relationship between commercial banks and SMEs in Rwanda. The results revealed as well, that commercial banks in Rwanda played a crucial role in contribution to SME’s economic development and small and medium entrepreneurs who got credit from commercial banks expanded their businesses and increased their income.

The determinants of bank selection criteria of SMEs: a fuzzy analytic hierarchy approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manpreet Kaur ◽  
Sanjay Gupta
Keyword(s):  
Commercial Banks ◽  
Selection Criteria ◽  
Small And Medium Enterprises ◽  
Research Process ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Valid Instrument ◽  
Two Phases ◽  
Quota Sampling ◽  
Medium Enterprises

Purpose Small and medium enterprises (SMEs) have been reported as a credit-constrained sector in the earlier literature. Amidst the available external financing options, SMEs are dependent upon banks for their financial needs, hence they offer an important profitable segment for banks. Commercial banks need to develop effective targeting strategies for this segment and ranking the priorities of SMEs in selecting commercial banks will be of great help to them. The purpose of this paper is to implement a fuzzy analytic hierarchy process (FAHP) multi-criteria decision model for commercial bank’s selection by SMEs. Design/methodology/approach The research process was carried out in two phases. In Phase I, a self-structured scale was developed to measure bank selection criteria of SMEs after an extensive review of the literature of relevant studies on the topic. A sample of 600 SMEs was selected through non-proportionate quota sampling and only 313 valid responses were received. Phase II was conducted to prioritize the extracted factors through FAHP, a multi-criteria decision-making technique. For this purpose, another questionnaire was designed in the form of pair-wise evaluation and the response was taken on the same from those 313 SMEs again. Findings The results showed that SMEs bank selection criteria can be categorized under six heads, namely, bank attributes, accommodation of credit needs (AC), bank personnel, financial factors (FF), service quality (SQ) and business knowledge. The research study produced a reliable and valid instrument for studying the bank selection criteria of SMEs. The results further revealed that AC is the most important factor considered by SMEs followed by FF and SQ. Going further, global weights were also calculated through the FAHP which revealed that the most important consideration (variable) viewed upon by SMEs is willingness to accommodate credit needs followed by flexible collateral requirements and absence of hidden charges. Research limitations/implications The results of the present study offer significant insights as to the factors SMEs consider while making a bank selection decision. It is of utmost importance for banks to identify true determinant factors used by SMEs while making bank choice decisions as they offer ample profit and revenue opportunities to banks. The results of the study provide a practical approach to banks that would help them in framing strategies for SMEs customers. Originality/value This is the first study of its kind which has not only focused on the hierarchy of factors measuring bank selection criteria of SMEs rather on the hierarchy of single variables also through the calculation of global weights. As banks cannot focus on all the dimensions of the criteria, they can focus on the spirit of that particular criteria.

The Impact of Globalization on Development of MSMEs

2021 ◽  
Vol 2 (1) ◽  
pp. 46-60
Author(s):  
Rama Mohana Rao Katta ◽  
Chandra Sekhar Patro
Keyword(s):  
Small And Medium Enterprises ◽  
National Level ◽  
Work Conditions ◽  
Firm Level ◽  
Market Opportunities ◽  
Growing Economy ◽  
The Government ◽  
Medium Enterprises ◽  
The Impact

Globalization has been a significant force in the development of the market and economic environments. The micro, small, and medium enterprises (MSMEs) need to focus on technological capabilities to face the competition in the globalized market. They have to analyze the market opportunities in the rapidly growing economy as well as emerging markets. The aids of a globalized and digital economy depends to an excessive extent on favourable business environments and healthy competition. The performance of MSMEs depends on accessibility to various strategic resources like abilities, technical know-how, innovativeness, and finance. Thus, it is imperative to consider the factors influencing work conditions firm level, and the strategies formulated at the national level are organized to local business perspectives. This paper examines the global scenario of MSMEs, the impact of globalization, the role of MSMEs in India, the growth perspectives of MSMEs during the pre-and post-globalization period, the critical challenges, and the role of the government in encouraging and developing MSMEs.

Technological Change Perspective for ERP Implementation in Small and Medium Enterprises

2020 ◽  
pp. 1506-1516
Author(s):  
Jessy Nair ◽  
Aarthy Chellasamy
Keyword(s):  
Morphological Analysis ◽  
Business Processes ◽  
Small And Medium Enterprises ◽  
Erp Implementation ◽  
Research Article ◽  
It Systems ◽  
Toe Framework ◽  
Organization Framework ◽  
Medium Enterprises ◽  
Organizational Preparedness

Small and medium-sized enterprises (SMEs) trail large organizations in leveraging IT systems. SMEs are beginning to understand the significance of implementing IT systems like ERP for improving their preparedness in business processes. Hence the objective of this research article is to develop a framework to analyse SME's organizational preparedness for implementing the technology. This research applies a General Morphological Analysis (GMA) framework to explore suitable models and variables for IT change preparedness to realize the benefits of ERP implementation in SMEs. An SMEs drawback in implementing IT tools is specifically due to a lack of knowledge and an acute shortage of resources like investment and manpower. The review of literature in this article using general morphological analysis is novel for ERP implementation in the SME sector. Based on the review of articles, a morphology with a technology organization framework and environment (TOE) framework which evaluates technological, organizational and environment is most adequate to understand the IT readiness for ERP among SMEs.

scholarly journals VICTORY TO THE METHOD OF INDICATIVE PLANNING IN THE SYSTEM OF INVESTMENT CREDITING OF ENTERPRISES

2020 ◽  
Author(s):  
Lydiadia Kostirko ◽  
◽  
Alexander Rоzmyslov ◽  
Keyword(s):  
Commercial Banks ◽  
Raw Materials ◽  
Small And Medium Enterprises ◽  
Banking System ◽  
Financial Resources ◽  
Natural State ◽  
Main Task ◽  
Labor Costs ◽  
Investment Activity ◽  
Medium Enterprises

A necessary component of investment activity is the process of accumulating the necessary funds to finance investments. The natural state of limited internal own funds of the enterprise requires the attraction of additional (external) financing in the form of loans and borrowings. Investment lending is a promising area of activity of banks, the main task of which is the allocation of financial resources for the for-mation and development of production. Solving the problem of investment lending as a real sector of the economy pursues two goals: stabilization of the banking system in the rational allocation of financial resources and economic recovery through strengthening the position of commercial banks and small and medium enterprises (by attracting credit resources). Therefore, commercial banks engaged in investment lending should constantly and carefully study and analyze the condition of partner banks, both those with whom they are already working and those who are potential partners. The essence of the normative method of planning is to use a set of norms and standards when calculating the indicators of the indicative plan. The norm is the absolute value of the maximum allowable amount of material resources (ie, raw materials, fuel), as well as the cost of living labor for the manufacture of a unit of production. Standard – a relative indicator that characterizes the degree of use of tools, objects of labor, living labor costs. Norms and standards of consumption of paid services is a system of estimating the level of consumption by one person of certain types of services, which is based on scientifically based calculations of rational consumption. At the same time, in order to make specific decisions of the bank, it is necessary to be guided by a pre-thought-out strategy based on the "goal tree" and the system of plans of a commercial bank. In tactical terms, the main standard solutions can be provided in the credit policy of the bank for the period corresponding to the term of the project. At the same time, in the world economic literature, the standard deviation is called risk and is one of the most common absolute indicators of risk measurement.

scholarly journals AN EMPIRICAL STUDY ON LENDING PATTERN AND PERCEPTION OF COMMERCIAL BANKS TOWARDS SMALL AND MEDIUM ENTERPRISES LENDING

2021 ◽  
pp. 26-36
Keyword(s):  
Commercial Banks ◽  
Small And Medium Enterprises ◽  
Secondary Data ◽  
Foreign Banks ◽  
Loan Default ◽  
Factors Affecting ◽  
Academic Knowledge ◽  
Significant Difference ◽  
Medium Enterprises ◽  
Sme Lending

Micro, Small and Medium sector (MSME) is the most dynamic sector due to its capacity for innovation, competence for advancements and perseverance to face multiple challenges. Though this sector contributes 8 per cent to GDP, 45 per cent towards manufacturing output and 40 per cent of exports. Still, they lack support to grow exponentially. Understanding the lending pattern of the banks and the perception of commercial banks towards MSME lending is essential not only for academic knowledge but also could necessitate policy changes. The objective of the research is to understand the lending pattern of banks to SMEs and the perception of commercial banks towards SME lending. The researcher used both primary and secondary data. Statistical tools ANOVA and Kruskal Wallis tests are used to analyze the collected data. The results indicate that there is no significant difference in the lending pattern of public sector banks, Private sector banks and foreign banks and the bank staff have a similar level of perception on difficulties in lending to SMEs, perception on the rejection of loan, perception on reluctance to serve SME sector, perception on loan default and factors affecting credit decisions irrespective of the type of the bank and experience in SME lending.

scholarly journals Globalization Of Entrepreneurship: Overwhelming Institutional Response In Favor Of SMEs In India

2011 ◽  
Vol 8 (3) ◽  
Author(s):  
Sivakumar Venkataramany ◽  
Daniel Fox
Keyword(s):  
Commercial Banks ◽  
Small And Medium Enterprises ◽  
National Level ◽  
Small Scale ◽  
Entrepreneurial Firms ◽  
Institutional Response ◽  
Federal Level ◽  
Lending Institutions ◽  
Medium Enterprises ◽  
Small Scale Industries

Indias approach to the promotion of entrepreneurial firms is unique, and to some extent, overwhelming. The country has a dedicated ministry for small scale industries at the federal level supported by several agencies at federal and state levels. Besides, numerous commercial banks, regional rural banks, urban and cooperative credit lending institutions participate in funding the micro, small, and medium enterprises. Such an effort, though seemingly superfluous, is the dire need for a country to enhance the competitiveness of entrepreneurial firms in order to unite them under an organized structure and integrate their operations into that of major global firms. Three national-level Entrepreneurship Development Institutes are engaged in skill development. This paper offers a critique of the present policy with regards to the SMEs with a prospective outlook into their future.

Constructive usage of WhatsApp in education sector for strengthening relations

2019 ◽  
Vol 33 (5) ◽  
pp. 954-964 ◽  
Author(s):  
Shiv Ratan Agrawal ◽  
Divya Mittal
Keyword(s):  
Service Industry ◽  
Small And Medium Enterprises ◽  
Education Sector ◽  
Customer Relationship ◽  
Teaching Staff ◽  
Content Type ◽  
Postgraduate Students ◽  
Crm System ◽  
Service Sectors ◽  
Medium Enterprises

Purpose The purpose of this paper is to explore the key role of WhatsApp as WhatsApp-customer relationship management (w-CRM) for strengthening the relationship in the education sector. The paper is exploratory in nature. Design/methodology/approach A self-administered questionnaire was developed with 20 items for four latent constructs. The data were collected from the undergraduate and postgraduate students of Sri Sri University, Cuttack (Odisha), India, based on convenience sampling. The hypotheses were tested through regression and correlation analyzes. Findings The findings of the study unveiled that the relationships between students and teaching staff, students and non-teaching staff, and teaching and non-teaching staff can be strengthened by the adoption of w-CRM. Practical implications WhatsApp can be an inevitable tool to emerge with traditional CRM system to facilitating the advance implementation of w-CRM in the service industry. Originality/value Although the present study is limited to one of the service sectors, i.e. education, it unfolds the scope of implementation of w-CRM in different services. Especially, small and medium enterprises can implement this tool hand to hand to maintain strong relationships with customers.

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