The Financial Gap in MSME Sector: A Review of Literature for the Period of 2014 to 2022

Abstract

The Micro, Small, and Medium Enterprises (MSME) sector plays a crucial role in the economic development of Jaipur. Micro, Small, and Medium Enterprises (MSMEs) operating in urban areas face a significant challenge in the form of financial disparity. The term "gap" refers to the disparity between the financial requirements of micro, small, and medium enterprises (MSMEs) and their capacity to secure adequate financing options. In addition, the absence of a comprehensive credit information system poses challenges for micro, small, and medium-sized enterprises (MSMEs) in their pursuit of securing funding. The absence of comprehensive credit information presents a challenge for financial institutions when evaluating the creditworthiness of small businesses. This phenomenon engenders reluctance on the part of lenders to extend loans, thereby exacerbating the pre-existing financial inequality. The main aim of the study is to examine the Financial Gap in the MSME Sector in Jaipur concerning an Analysis of the Factors Contributing to the Gap and Potential Solutions. The study also focuses on the key factors contributing to the financial gap in the MSME sector in Jaipur. Lastly, the study examined the limited availability of collateral that impacted the access to finance for MSMEs in Jaipur.