ABSTRACT
This chapter analyses the importance of financing sources (formal and informal) for MSMEs in India. We employ Fourth All India Census of MSMEs 2006-2007 data to empirically verify this relationship. Addressing concerns of endogeneity of finance variable, we find a positive relationship between access to credit and output growth. We find that the finance-growth nexus is more striking in the case of young firms. Though we find slow growth of firms owned and managed by women as compared to male-owned firms, the results also show that credit access has a larger impact on the growth of female-owned firms as compared to the growth of an average firm in the MSME sector.
