Analyzing the Inhibitors of MSMES’ Access to Banks’ Financing: Evidence from Khyber Pakhtunkhwa, Pakistan

Abstract

This study analyses the constraints that impede micro-scale, small-scale, and medium-scale enterprises (MSMEs) from accessing banks’ finances in the Khyber Pakhtunkhwa (KP) province, Pakistan. In this regard, a survey questionnaire was administered where 410 MSMEs were randomly selected for data collection from the manufacturing, retailing, services, and wholesaling sectors in districts Bannu and Peshawar. After the data screening, we conducted correlations and multiple regression analyses on the final valid data. Our results indicate that low business production, firms’ size, and gender discrimination of MSMEs’ entrepreneurs were the main barriers that restrict MSMEs to access banks’ finances. The findings have newer implications for government, concerned banks, and the MSMEs to make effective plans to properly address the obstacles that impede the MSMEs’ access to banks’ finances in KP.