Review of Professional Management- A Journal of New Delhi Institute of Management

Sushma Rani Verma ¹

Affiliations
1 N. C. College of Engineering, (Israna) Panipat-132107, Haryana, IN

Abstract

Finance is one of the factors occupying an important place in all types of economic activities. The growth of any industry largely depends upon the availability of adequate finance in proper time. Financing o f Small Scale Enterprises is that critical aspect which gains special attention of banks and other financial institutions. It is included in priory sector lending. This paper presents views of different authors about the financing of small scale industries. More specifically, it throws light on the significance of informal (family or personal) and formal (banks) sources of finance at different stages of growth. The literature suggests that both formal and informal institutional support have played a limited role in fostering small entrepreneurial expansion. Although bank finance is valuable in for small industries but small entrepreneurs do not rely on it at the initial stage of business. There is a great scope of research in this field, especially in the Indian context because the SSIs occupies a unique position in the Indian Economy for its contribution towards value addition, employment generation, and the expansion of entrepreneurial base and also for the diversification of the industrial sector.

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Sushma Rani Verma ¹

Affiliations
1 N.C. College of Engineering, (Israna) Panipat, Haryana, IN

Abstract

The Small Scale Industries (SSI)occupies a unique position in the Indian Economy/or its contribution towards value addition, employment generation, and the expansion of entrepreneurial base and also for the diversification of the industrial sector The major objective of this research paper is to know the financing pattern of small scale industries in Haryana. Moreover an attempt has been made to explore the determinants of capital structure (leverage). Percentage, correlation and regression methods have been used for the purpose. Results of percentage method show that long term sources are being used more and more over time. Secured loans from banks and other financial institutions form the largest part of long term sources of finance. Correlation shows that leverage is having a significant relationship-with profitability and cost of borrowing. Seven independent variables have been used for the analysis. Results of regression analysis indicate that profitability and cost of borrowing are the determinants of leverage in SSEs in Haryana. The results support the application of Pecking Order Theory in small sector.

Keywords

Financing Pattern, Capital Structure, Pecking Order Theory, SSI.

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