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What constitutes financing gap in Indian SMEs – owners’ perspective?

Purnima Rao (Malaviya National Institute of Technology, Jaipur, India)
Satish Kumar (Malaviya National Institute of Technology, Jaipur, India)
Vidhu Gaur (Management Development Institute, Gurgaon, India)
Deepak Verma (Malaviya National Institute of Technology, Jaipur, India)

Qualitative Research in Financial Markets

ISSN: 1755-4179

Article publication date: 2 May 2017




This exploratory study aims to investigate the financing issues faced by Indian small and medium enterprise (SME) owners. It also classifies the financing constraints into four financing gaps, namely, demand, knowledge, supply and benevolence.


The study uses the convergent interviewing technique to highlight the key issues being faced by SME owners in financing. Forty-four owners from different industries and having dispersed demographics have been interviewed in the study.


The findings reveal the real-time issues being faced by SME owners. SMEs faced both demand- and supply-side constraints. The most common financing challenges are high cost of credit, complex procedures of lending institutions, information asymmetry, creditworthiness and self-abstaining from external financial resources. Issues pertaining to lack of knowledge and awareness about the financial products and services are also being noticed by the researchers.

Research limitations/implications

This study identifies the major financing concerns of SMEs and thereby provides a directional approach to the policymakers in the area of SME financing.


The study offers a better and data-based understanding of financing issues being faced by the SME owners. The usage of convergent interviewing allows the researchers to highlight the common issues raised by the SME owners.



Rao, P., Kumar, S., Gaur, V. and Verma, D. (2017), "What constitutes financing gap in Indian SMEs – owners’ perspective?", Qualitative Research in Financial Markets, Vol. 9 No. 2, pp. 117-131.



Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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