PurposeAccessing formal mainstream finance is a cumbersome process for Micro, Small and Medium Enterprises (MSMEs) of emerging economies. Empirical investigations have connected finance accessibility to financing gap that restricts MSMEs from borrowing through formal channels. The purpose of this study is to explore the influence of financing gap on firms' financial structure (FS) practices. In this regard, the research framework divides financing gap into four dimensions, namely: demand gap (DG), supply gap (SG), knowledge gap (KG) and empathy gap (EG).Design/methodology/approachThe paper adopts a quantitative approach to establish the underlying relationship between the variables. The participants of the self-structured questionnaire survey were 219 MSME owners from manufacturing, trading and service industries. The results are inferred through the partial least squares structural equation modeling (SEM) technique.FindingsThe findings recognise a significant impact of financing gap on the FS practices of firm owners. The financing constraints contributing to KG, SG and EG are found to be extending the unwillingness of firm owners to borrow through formal channels. Further, the results also confirm the influence of financing gap on the pecking order framework (POF) of MSMEs' FS.Practical implicationsThe study offers the perspective and hesitance of MSME owners towards mainstream financing. The key findings are useful for the financial intermediaries and policymakers, who need to be sensitive and proactive in their small business lending process.Originality/valueThe study adds to the limited evidence of various dimensions of financing gap. It also addresses the role of financing gap on the conscious preferences of MSME owners towards the informal source of financing along with the POF.

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

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PurposeThe Micro, Small and Medium Enterprises (MSMEs) counter numerous financial obstacles concerning business financing and cash flow management. The study, therefore, intends to examine the level of perceived severity of financial constraints on the business growth of enterprises, in terms of sales, profitability and asset growth. An attempt is made to study the influence of owner and firm attributes as the determinants of financial constraints faced by MSMEs.Design/methodology/approachThe data were collected from MSME owners of Northern India through a self-administered questionnaire. In total, 213 responses were analysed using partial least squares-structural equation modelling (PLS-SEM) technique through SmartPLSv2.FindingsThe findings advocate the role of owner and firm attributes in the severity of financial constraints experienced by the MSME owners. Most importantly, the study establishes a strong link between owner and firm attributes and cash flow constraints. Further, the paper confirms the negative influence of financing and cash flow problems on the growth of the firm.Research limitations/implicationsThe evaluation and categorisation of perceived financial challenges into meaningful dimensions generate value to the problematic area of MSME operations. Thus, the findings are useful for the policymakers and researchers to contemplate the financial vulnerability of MSMEs.Originality/valueThe empirical findings of the present study add worth to the limited evidence of the relationship between owner and firm attributes and severity of cash flow constraints faced by the Indian MSME owners.

This article aims to examine the impact of mergers and acquisitions (M&A) on the financial performance of the construction and real estate industry, using the broad spectrum of financial ratios. The period of study is from 2011 to 2020, and paired t-test methodology has been used. It is hypothesized that there is a significant difference in the pre-M&A period and post-M&A period. The study findings conclude that profitability ratio and liquidity ratio have improved significantly, whereas leverage ratio exhibits no change in performance. In the efficiency ratio, the fixed-assets turnover ratio substantially improves, but the total asset turnover ratio and current asset turnover ratio show a slight improvement. The study concludes that the Indian construction and real estate company’s financial performance has improved overall for the acquiring firms during the post-M&A period. The study implies that the construction sector supports the synergy hypothesis, stating that M&A will improve synergy during the post-M&A period because of the consolidation of two firms’ resources.