Impact of Credit Disbursement on Performance of MSMEs in India: An Empirical Analysis

To examine the effect of credit disbursement on the performance of Micro, Small and Medium Enterprises (MSMEs), the export and output have been supposed as the best indicators of performance of MSMEs in this study. For the empirical analysis, panel data analysis technique has been used. Study reveals that credit disbursement and output of the MSMEs have a significant positive effect on the export of MSMEs, whereas, employement has significant negative impact on the export across all the states/UTs. Study further highlights that inputs are having significant positive effect on the output across the MSMEs. Further, to examine the nature of return to scale and effect of the technical change on the output of the MSMEs, we have used the translog production function. The estimates of regression equation indicate that the return to scale is increasing, whereas, the effect of the technical change has been found insignificant.