Formal Sources Of Finance Research Articles

A comparative analysis of msme finance in india

The Micro, Small and Medium Enterprises (MSME) sector is one of the dynamic sectors of the Indian economy in terms of productivity, contribution to GDP, and employment. Their role in nurturing entrepreneurship through innovations and generating employment opportunities has been commendable. Access to financial resources has been a catalyst as well as a challenge to the growth of this sector both in the short-term and long-term. The purpose of the study is to describe the sources of finance available for MSMEs in India and to comparatively analyze the trend in the provision of credit by the Scheduled Commercial Banks (SCB) and Non-Banking Financial Companies (NBFC) to the MSMEs. The findings of the study provide evidence that in India MSMEs look at the informal sources offinance predominantly compared to the formal financial institutions. Among the formal sources of finance, the NBFCs have outperformed the SCBs.

Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

The role of formal and informal finance in the informal sector in Ghana

Within the developing world, especially Sub-Saharan Africa (SSA), informal (small and medium) enterprises’ (SMEs) access to financing has been extremely limited mainly because of the reluctance of banks and other formal financial institutions to lend to such firms. The impact of this challenge on their growth trajectory has remained relatively indeterminate. This study examines the differential impact of sources of finance on the growth of informal firms in Ghana. We employ the Heckman Selection Technique (HST) to model the selection process of firm financing choices and reverse causality problem. By making use of the World Bank’s enterprise survey data on 720 informal firms in Ghana from 2007 – 2010, we find that formal sources of finance, compared to informal sources, are superior in their impact on firms in Ghana. Formal finance institutions, with their ability to provide more than just finance, positively affect firm growth. This result has an important policy implication for the current focus of Government of Ghana in promoting indigenous entrepreneurship through initiatives that will enhance access to financial support of local enterprises in Ghana. In view of this, this study proposes that Government policy towards formal financing institutions and their lending to informal sector need adjustments to provide incentives that will encourage increased lending to informal firms.

Pengaruh Kredit Terhadap Pendapatan Petani Kopi Arabika Di Kabupaten Aceh Tengah Provinsi Aceh

Agric finance is one of the important components in the development of coffee plant which is one of the main export commodities of Indonesia. This research aims to 1) identify the factors affecting credit access to formal sources of finance by the farmers, and 2) analyze the effects of credit on the farmer income. The study was conducted in the Arabica coffee production center at Aceh Tengah district. Data were collected from 73 farmers by the stratified random sampling. The data analysis was conducted using the probit model, and the results showed that the factors affecting farmers’ access to credit include age, dummy of creditor‘s visit and farmers' knowledge. Using simultaneous equation model (2SLS), the estimation results showed that credit has positively increased production and food consumption of organic Arabica coffee of the farmers. Correspondingly, the simulation results showed that the increase in production and consumption of food will increase the productivity of the labor in the family, and this is the dominant input in organic Arabica coffee farming that will increase the farmers' income. Keywords: organic Arabica coffee, credit, simultaneous (2SLS), farmers’ income, probit

Constraints to Agricultural Diversification in Mirzapur District of Uttar Pradesh

Institutional constraints play a significant role in diversification of agriculture in backward regions of the country. The present study was conducted in Mirzapur district of Uttar Pradesh with an objective to examining constraints that affect diversification. Using data from a primary survey in Mirzapur, it was found that lack of skill in modern agriculture, poor access to financial services, and lack of marketing facilities played a decisive role in agricultural diversification. Providing institutional support in the form of access to formal sources of finance and making farmers organizations will help in promoting diversification and reducing livelihood risks.

Risk Management and Insurance of Small and Medium Scale Enterprises (Smes) in Nigeria

This study assesses the financing options available to Small and Medium Scale Enterprises (SMEs) in Nigeria to identify the one that is most patronized by them, using Benue and Nasarawa States as case study. Mean scores and standard deviation were used to present and analyze the primary data obtained via questionnaires. Correlation was used to substantiate whether there is similarity in the inherent identified problems of each financing option. Simple percentages combined with mean scores were used to test hypothesis one while Chi-square was used to test hypothesis two. The result shows that SMEs are significantly financed by informal sources of finance than the formal sources of finance. The formal financing options are more organized and as such avoid SMEs because of their risky nature. Predominant SMEs are lacking in good risk management strategies and insurance cover which is why their funding problem still subsists. The major recommendation is that Capacity building and sensitization programmes for all registered SMEs should be put in place by government to enlighten them on the benefits of good risk management and insurance of their businesses. Both the government and the banking sector should mutually agree on a credit guaranteed scheme strategy that will incorporate a risk-sharing arrangement as a way of encouraging the banks to channel funds to the SMEs sub sector for their growth and development which would translate into the national economic growth and sustainable economic development of Nigeria.

Issues Facing Small Egyptian Construction Firms:The Financing Barrier

This paper aims at investigating the magnitude of the financing barrier faced by small Egyptian construction firms (SCFs). A survey questionnaire was compiled and sent to Egyptian contractors. For a further investigation of the SCF financing issue, the financial data for a typical small construction firm was examined.Findings revealed that the lack of access to suitable sources of finance was indeed a barrier to growth for SCFs.Approximately 70% of SCFs stated that they could not access formal sources of finance, and 85% confirmed that the lack of suitable financial resources hindered their ability to compete for larger projects. Finally, the paper highlights the prospective benefits that could be achieved if finance were made available to SCFs, for the firms and the economy as well.

Three stokvel clubs in the urban black township of KwaNdangezi, Natal

Academic studies have neglected the financial aspect of the informal economy. This article examines saving among the poor and their savings institutions (stokvels). The black community is disadvantaged in the financial market by having limited access to formal sources of finance. Stokvels are important in filling this gap. A planning priority for South Africa is adequate financial provision for all its people. In financing the reconstruction of the economy, policies for enhancing savings and redirecting them into investment will prove crucial.