The nexus between financing pattern, firm-specific factors, and financial performance : panel evidence of listed SMEs in India

The study analysed the impact of financing patterns (FPs) on the financial performance of 226 listed small and medium enterprises (SMEs). Firm size, age, liquidity, sales growth (SG), and asset tangibility (AT) are treated as firm-specific control variables. The result indicates that total debt financing (TDF), short-term financing, and trade credit financing have a significant relationship with Return on Asset (ROA), whereas long-term debt financing (LTDF) does not. Further, Return on Equity (ROE) is used to confirm the robustness of the result and demonstrate the same direction of the relationship with financing. Thus, the study provides an illustrative description of relationships and helps in developing an understanding of accessing the future financial needs of SMEs.