A Study on Impact of Microfinance on the MSMES

Abstract

Access to finance remains a significant challenge for Micro, Small, and Medium Enterprises (MSMEs), affecting entrepreneurs, financial institutions, and government bodies. This study aims to explore the key obstacles MSMEs face in obtaining financial support. Microfinance institutions (MFIs) offer a variety of financial and non-financial services to assist MSME entrepreneurs, such as credit, savings, leasing, insurance, and training. The research was carried out in Madurai, covering various business sectors including jewellery, retail, metal works, textiles, bookstores, tailoring, and small-scale manufacturing. It involved both primary and secondary sources of data. Primary data were gathered through a questionnaire, with responses from 25 participants. Despite the crucial role of financial institutions, banks, and MFIs in the growth of MSMEs in Madurai district, there is limited research in this area. The findings indicate that the main issues hindering financial utilization by MSMEs are low levels of financial literacy and a lack of tools to properly assess and implement business projects.