Financial Problems and Behavior of SMEs towards Credit facilities Offered by Goverment, Banks, and DFIs

Abstract

The small and medium enterprise (SME) sector is defined by size rather than a uniformity of business process or markets. The advantages and ills of this mode of business are mostly associated with size. Size gives SMEs the flexibility to survive in difficult economic conditions; it also helps them to create jobs at a lower capital cost. It is levelheaded to say that Pakistan economy is an economy of SMEs. The significant role of SME is plainly indicated by research and statistics. However, efforts had remained restricted focusing on the large enterprises, and neglecting small and medium enterprises which are the back bone of the economy. Here are also some hidden and apparent obstacles in the path of growth of small and medium enterprises in Pakistan. The most important are; political instability, law and order situation, financial constraints, energy crisis, taxation problems, labor issues, lack of coordination and regular information exchange mechanism among institutions, etc. But this research will focus on only the financial problems faced by the small and medium enterprises and also their attitude and behavior towards the credit facilities offered by the banks, national government and other financial institutions.It is a descriptive kind of study. Both primary and secondary data has been collected. Primary data has been collected mostly through self-administered questionnaires and some face-to-face interviews. Secondary data has been collected from books, articles, journals and the Internet. The results of the research have been shown in the form of tables, bar graphs and pie charts.