Analysis Of Financing Constraints Of Women Owned Small And Medium Enterprise In Developing Countries In South Asia

Small and Medium Sized Enterprises(SMEs)play a significant role in the socio-economic development of a country through business opportunities,employment generation and poverty alleviation.Furthermore,they are the foundation of the future generations of companies,owing to their potential to grow and expand despite having a small beginning,that is more and more large firms started as SMEs before there grew large.Economically empowered women are a major catalyst for development,as they usually reinvest their money in their children’s health,nutrition and education,their family,and their community.Societies that discriminate on the basis of gender pay a significant price in terms of higher poverty,lower quality of life,slower economic growth,and weaker governance.However,women-owned SMEs are constrained by barriers like limited access to finance,which impedes both growth and development and leads to failure.Most of women entrepreneurs face disproportionately high and differentiated barriers relative to male entrepreneurs,for instance,in laws that discriminate by gender,in customary practices,less access to resources,and lower levels of education,training,and work experience.Most of the empirical studies on SME financing constraints face d by women-owned SMEs are based on developed economies and have limited applicability in developing countries in south Asia like Nepal due to different levels of economic and financial development.Gender balance in the credit market is essential for economic prosperity.Greater gender equality can enhance economic productivity,improve development outcomes for the next generation,and make institutions and policies more representative.Investigated and compared the Nepalese women owned SMEs with other South Asian countries using an instrumental variable approach with a two-step probit model.Financing constraint has been identified as one of the major issues inhibiting the growth and sustainability of SMEs in emerging countries market,particularly to women-owned small and medium sized enterprises.This study provides insights of gender discrimination in SMEs in South Asian economies from the perspective of owners and top managers.Results reveal that except Nepal,SMEs owned by women entrepreneurs are on average three percentage less likely to be credit-constrained compared to their male counterparts in most of South Asian economies.Financial constraints are not directly observable,so empirical research relies on indirect measures as well.Financial intuitions seek the success factor to issue the loan to women-owned SMEs in Nepal;therefore,an investigation performed using multiple regression analysis.Given the economic importance of either start-ups or newly established SMEs and the intense interes t by policymakers to encourage entrepreneurship,it is important to understand the linkage between financial constraints and success of these firms.Financial institutions in Nepal generally perceive SMEs as small savers and high-risk segment and regard women-owned SMEs to be riskier than men.They measure the success factors before issuing the loans.Results show that personal,social and technical factors are positive and significant relation with success of women-owned enterprises.Involvement of control variable called experience and type of business also have positive and significant relation with success of women entrepreneurs.Investigating and analyzing the government policies to support women-owned SMEs development.Financial institutions are reluctant to offer credit lending to SME sector due to the possibility of risks in early-stage ventures in terms of insufficient assets,having no proven track re cord and low capitalization.To overcome the problem faced by women-owned SMEs during the credits granting,government has encouraged the financial institutions to increase access to credits and supports to SMEs by legitimate legal structures and alternate financing mechanisms.However,the investigations find few shortfalls in Nepalese government’s regulatory policies,including lack of proper understanding about venture capital funding by authorities themselves.The study provides lesson and policy guidelines to improve the competitiveness of SMEs in Nepal.Women-owned SMEs are important to almost all economies in the world,but to developing south Asian countries such as Nepal,which has severe income gap between the rich and the poor,unemployment and la rge number of Nepalese male migrant workers,they are particularly significant.However,financing constraints are one of the biggest concerns impacting potential women-owned SMEs from developing south Asian countries like Nepal.Thus,in context of developing south Asian countries like Nepal,three major streams of research examining the relevance of financing constraints for women-owned SMEs reviewed.