Financial Tools and Business Growth: Evidence from Valle De México

Abstract

In México, micro, small and medium-sized enterprises (MSMEs) represenet 99.80% of economic units and employ 74% of the population. However, the percentage of gross production is just 35.90%. This implies that, despite their strong presence in the indicators of economic units and jobs generated, their assets are limited and there are insufficient financial resources or inadequate financial management. This study was performed in the Valle de México metropolitan area, which covers the two federative entities with the highest number of economic units, population and gross domestic product. We examine a sample firms of MSMEs in the metropolitan area to apply financial tools and identify the effect on growth and its economic-financial situation. The research was qualitative and includes six sample firms of different MSMEs which were analyzed through three stages: diagnosis, proposal and implementation of financial tools and evaluation. Data was obtained through in-depth interviews, six-month observations and analysis of financial information. Each case study showed a different situation. In most situations favorable results were obtained in administrative control yet, the growth was still not observed in most MSMEs.

Keywords: Financial Tools, Business Growth, Msmes, Finance Management

JEL Classification: G30, M10, O12