Institutional Financing and Sustainable Growth of MSMES: Assessing Performance and Prospects

This study investigates the constraints faced by Micro, Small, and Medium Enterprises (MSMEs) in accessing and utilizing financial assistance across Punjab, Haryana, Himachal Pradesh, and Chandigarh. Utilizing a primary data-based approach and a structured Likert-scale ‎questionnaire, the research employed Exploratory Factor Analysis (EFA) to uncover the underlying dimensions of these constraints. Pre-‎estimation tests confirmed the suitability of the data, and EFA revealed two distinct factors: Procedural and Operational Barriers, and Financial Systemic and Institutional Constraints. The findings indicate that MSMEs struggle not only with complex documentation and collateral ‎requirements but also with limited awareness, digital inaccessibility, and trust deficits in formal financial institutions. These constraints are ‎compounded by regional and demographic disparities, requiring differentiated policy responses. The study concludes that addressing ‎MSME challenges demands an integrated reform framework combining simplified operational processes with system-level institutional ‎transformation. The results contribute meaningfully to policy discourse on inclusive financial access and MSME development in regional ‎economies‎.