Determinants of Working Capital of Indian MSMEs
Presented at International Conference - "Ample Opportunities and Growth Prospects in India” organized by Babasaheb Ambedkar Open University at Ahmedabad – 7th and 8th December, 2019
11 Pages Posted: 8 Jul 2020
Date Written: December 4, 2019
The Indian Micro, Small, and Medium Enterprises are the forerunners in the Indian growth story with a contribution of 29 percent to Indian GDP, 45 percent contribution to exports, and employment generation of 11.10 crores. Further, every business entity needs working capital to facilitate the smooth functioning of its business, revenue generation, and efficient asset utilization. In this context, the current study examined the determinants of working capital of the Indian Micro, Small, and Medium Enterprises over a period of 13 years from 2006-07 to 2018-19. Taking firm size, tangibility, leverage, profitability, sales growth, as determining variables, the results of stepwise regression analysis revealed that firm size and leverage are significant determinants of working capital for firms in Indian MSMEs in the chemical industry.
Keywords: Determinants of Working Capital, Indian MSME Sector, Firm Size, Leverage, Tangibility, Cash Conversion Cycle
JEL Classification: G31, G32
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