Factors Affecting Decision Makers Preference of MSMEs in Financing Sources Choice

Abstract

The study examined the choice of the different financing theories for explaining the capital structure source of Micro, Small and Medium enterprises (MSMEs) that seeks to raise their capital, through examining the affecting factors on the main capital structure decision. The study used a questionnaire for 220 of Palestinian MSMEs in order to examine the financing decisions in these firms according to the main capital structure theories. The study found that in accord with the POT, it was confirmed an approach comprising an initial check on the availability of internal resources, followed by the use of internal capital. Where the most of the sample were prefer to depend on the personal money rather than to increase their capital through the partners and loans. Therefore, this suggests the need to raise awareness with regard to the concept of capital structure and the other determinations that affect MSMEs' capital financing.