Determination of Factors Affecting Capital Structure of Micro, Small&Medium Enterprises in India

The present paper is an attempt to investigate the critical factors that affect the capital structure of forty Micro, Small& Medium Enterprises (MSMEs) in India. The research study was performed from five year plan 2011 to five year plan 2017. Four different economic sectors (Information Technology, Infrastructure and Automobile) have been considered for the present research. The study examines the effect of factors under study on the capital structure across all given sectors. The management environment was found to relate to all types of capital structure performance. Panel Data regression analysis was performed by applying Statistical package STATA. It reveals that firm size has been emerged as major determinant that affects capital structure of Micro, Small& Medium Enterprises under study. The present results indicate that the MSMEs with sound liquidity positions, exercising the practice of paying high dividends and fall under high tax brackets do not largely depend upon debt financing. The conclusions of this study confirm asset structure came out as the least influenced factor that affect capital structure of MSMEs.