Constraints to SMEs: A Rotated Factor Analysis Approach

Syed Quader and Abdullah Md.Nayeem

MPRA Paper from University Library of Munich, Germany

Abstract: There is little doubt that SMEs plays a vital role in development of an underdeveloped economy, but still this sector is facing multifarious problems relating to raw materials, power, land, marketing, transport, technical facilities, and finance etc and due to these constraints it is getting more difficult for them to contribute to nation’s GDP as expected. This paper attempts to find out the major constraints faced by the SMEs in Bangladesh selected from five sub-sectors using varimax normalization method based on primary questionnaire survey and rank the factor constraints according to their level of severity. It identified seven major factors comprised of 12 variables working as impediments to SME growth and development, amongst which high lending rate, government regulatory constraint, small domestic market size, collateral requirement for financing and lack of technically skilled workers are on the top.

Keywords: SME; Economic Growth; Constraint; Factors; Rotation; Varimax (search for similar items in EconPapers)
JEL-codes: L53 L67 L88 M21 O14 O16 (search for similar items in EconPapers)
Date: 2008
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Published in South Asian Studies 24.2(2009): pp. 334-350

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