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- Title
Innovations in Financing SMEs: A Study on the Growth of Crowdfunding in India.
- Authors
P. A., Ibrahim
- Abstract
The purpose of this paper is to provide a conceptual foundation and understanding of crowdfunding; and their applications in Small and Medium Enterprises (SMEs) growth trajectory. To date, few studies have investigated the antecedents and consequences of crowdfunding financing mechanisms in startup and SMEs. One of the biggest constraints to Small and Medium Enterprises development is a lack of financial resources to start, sustain and grow their businesses. Financial shortage in the segment is alarming, 55 to 68 percent of formal SMEs in emerging markets are either unserved or underserved by financial institutions (World Bank 2017). The worldwide financial crisis of 2007-2008, coupled with higher regulations and prudence norms implemented by financial institutions further bring down the credit flow to the SME sector. On the other hand, SMEs often dormant to approach financial institutions for the credit due to Nonavailability of adequate and timely credit; High cost of credit; Collateral requirements. As the results, financial shortages of the segment are accumulated and remain as a perennial issue. Despite all these, the growth and development of innovative finance options in SMEs financing, particularly crowd funding provide an alternative credit source. As the crowdfunding continue to grow, it offers the possibility of solution to small and medium enterprise' funding problems. Crowdfunding is a "financing escalator", it enhances the SMEs, improve sources of finance and ease the access of finance for the segments. Crowdfunding is a collective effort it allows entrepreneurs to source their funding from various individual sources through internet platforms. This paper integrates various literatures on innovations in financing SMEs and analyses the growth of crowdfunding in India. It also discusses the extent of crowdfunding in easing SME financing.
- Subjects
INDIA; SMALL business; CROWD funding
- Publication
Wealth: International Journal of Money, Banking & Finance, 2018, Vol 7, Issue 3, p66
- ISSN
2277-9388
- Publication type
Article