Role of Small and Medium Enterprises in Managing Financial Liquidity in Corporate Sector: A Case Study of Pakistan

Yıl 2024, Cilt: 4 Sayı: 1, 23 - 37, 30.06.2024

Muhammad Ayub Mehar

https://doi.org/10.61192/indpol.1471629

Öz

This study recognizes the importance of small and medium enterprises in improving the financial liquidity in the corporate sector. These enterprises play an important role in the sale of finished products on credit and managing the inventories of merchandizing goods. Consequently, the burden of inventory holding and receivables from consumers is transferred from large-scale industries to small and medium enterprises (SMEs). In such ways, they facilitate the large-scale manufacturers. Large-scale firms can focus on investment in fixed assets. This mechanism promotes the expansion of business activities in the economy. The small and medium enterprises in Pakistan play also an important role in earnings from exports. To identify these linkages is the main concern of the study. The study identifies the determinants of inventories, receivables, exports, and spending on employment. The study is based on 6 years’ data from 398 companies listed on the Pakistan Stock Exchange, while panel least square techniques have been applied to estimate the parameters.

Anahtar Kelimeler

Fixed assets, Industrial growth, Inventories, Rate of inflation, Receivables

Kaynakça

• Ahmad Imran and Karim Alam. 2015. Credit Flows to Pakistan’s Manufacturing SME Sector. The Lahore Journal of Economics 20 (September 2015): pp. 261–270
• Brassell, M. and K. King. 2013; Banking on IP: The Role of Intellectual Property and Intangible Assets in Facilitating
• Business Finance; Newport: Intellectual Property Office (Final Report)
• Chin-Yoong Wong and Yoke-Kee Eng. 2019). Implications of Platform Finance on Monetary Policy Transmission; Tokyo: Asian Development Bank Institute: Working Paper Series; Working Paper No.970
• David M. Drukker. 2003. Testing for Serial Correlation in Linear Panel-Data Models; The Stata Journal (2003) 3, Number 2, pp. 168–177
• De Rassenfosse, G., T. Fischer. 2016. Venture Debt Financing: Determinants of the Lending Decision; Entrepreneurship Journal; 10(3): 235-236
• Erin Griffith. 2014. ‘Why Startups Fail, According to Their Founders; Fortune; September 25, 2014; 10-27
• Gallup Pakistan. 2004. Gallup Cyber Letter on SME in Pakistan. Islamabad: Gallup Pakistan
• Government of Pakistan (2021); National SME Policy 2021. Islamabad: Ministry of Industries and Production, Smal and Medium Enterprises Development Authority, 2021
• Government of Pakistan: Ministry of Industries & Production. 2013. Developing SME Policy in Pakistan - for Deliberation by SME Task Force; Lahore: Small and Medium Enterprise Development Authority
• Hsu, D.H. 2004. What do Entrepreneurs Pay for Venture Capital Affiliation? Journal of Finance; 59(4): 1805–1844
• International Trade Centre. 2019. SME Competitiveness Outlook 2019: Big Money for Small Business – Financing the Sustainable Development Goals; Geneva: 2019
• Japan International Cooperation Agency. 2018. Data Collection Survey on SME Finance in the Islamic Republic of Pakistan: Final Report. Karachi: JICA 2018
• Lerner, J. 1995. Venture Capitalists and the Oversight of Privately-held Firms; Journal of Finance; 50(1): 301-318
• McKinsey Global Institute. 2016. Digital Finance for All: Powering Inclusive Growth in Emerging Economies. McKinsey & Company (www.mckinsey.com/mgi)
• Meghana Ayyagari, Asli Demirgüç-Kunt and Vojislav Maksimovic. 2019. SME Finance’; Washington: World Bank Group; Policy Research Working Paper 8241
• Mehar, Ayub. 2005a. ‘Is Debt a Substitute of Equity? Relevancy of Financial Policy in Current Economic Scenarios; Applied Financial Economics, 2005, 15, 337–366
• Mehar, Ayub. 2005b. Financial Repercussion of Cost, Revenue and Profit: An Extension in the BEP and CVP Analysis; Applied Financial Economics, 2005, 15, 259–271
• Mehar, Ayub. 2005c. Simultaneous Determination of Inventories and Accounts Receivable; Managerial and Decision Economics; 2005 (June), 259-269
• Mehar, M. Ayub. 2005d. Corporate Governance and Dividend Policy; Pakistan Economic and Social Review; Volume 43 (1); pp: 93-106
• Mehar, M. Ayub. 2007. World Textile in Free Trade Regime”; Journal of the Textile Institute, Volume 98 (2); pp: 177-188
• Mehar, M. Ayub. 2021. Bridge Financing during COVID-19 Pandemics: Nexus of FDI, External Borrowing and Fiscal Policy”; Transnational Corporation Review; Vol. 13 (1); pp: 109-124
• Mehar, M. Ayub. 2022. Magnitude of Investment and Global Value Chain: A Case Study of Textile & Clothing Industry of Pakistan. Journal of Textile Institute. Volume 113 (2); pp: 191-198
• Najeeb K Hassan (2021). SMEs: An unloved story. The News International, 28th December 2021
• Nanda, R. and M. Rhodes-Kropf. 2013. Investment Cycles and Startup Innovation; Journal of Financial Economics; 11(2): 403-418
• Naoyuki Yoshino and Farhad Taghizadeh-Hesary. 2019. Unlocking SME Finance in Asia: Roles of Credit Rating and Credit Guarantee Schemes’; London: Taylor and Francis
• Sherazi Syed Kamran, Muhammad Zubair Iqbal, Muhammad Asif, Kashif-ur-Rehman and Syed Saad Hussain Shah. 2013. Obstacles to Small and Medium Enterprises in Pakistan. Principal Component Analysis Approach. Middle-East Journal of Scientific Research 13 (10): 1325-1334
• State Bank of Pakistan. 2021. Challenge Fund for SMEs: Expression of Interest Document. Karachi: State Bank of Pakistan, 2021
• State Bank of Pakistan. 2023; Quarterly SME Financing Report’ Karachi: State Bank of Pakistan
• Van Burg, Elco, Romme, A. Georges, Gilsing, Victor, Reymen, and Isabelle M. J. 2008. Creating University Spin-Offs: A Science-Based Design Perspective; Journal of Product Innovation Management; 25 (2): 114–128
• Wooldridge J. M. 2002. Econometric Analysis of Cross Section and Panel Data; Cambridge, MA: MIT Press
• World Bank. 2018. Improving Access to Finance for SMEs: Opportunities through Credit Reporting, Secured Lending and Insolvency Practices. Washington: World Bank
• World Bank. 2023; World Development Indicators; Washington: World Bank Group: 2023
• World Economic Forum. 2022. Future Readiness of SMEs and Mid-Sized Companies: A Year on Insight Report. Geneva: World Economic Forum 2022
• Zoltan, Acs and D.B. Audretsch. 1990. Innovation and Small Firms; Cambridge MA: MIT Press: 1990