Capital structure analysis of MSMEs with reference to start-up and later stages

Abstract

Micro, small and medium enterprises (MSMEs) worldwide differ on the parameters of definitions and the set of challenges faced. Although MSMEs continuously enhance the economic activity of a country, the difficulty in accessing finance slows down their growth and development. They find it more difficult to raise finance at an initial stage as compared to a later stage. Given this background, this research focuses on finding the impact of some selected factors like size and sector on the capital structure of MSMEs, in emerging economies like India. It affirms that regarding capital structure, MSMEs do not differ among themselves and can be regarded as common cohort or a single unit of analysis. The empirical testing provides evidence that capital structures of MSMEs differ across initial and later stage, with reference to sector and age classes.