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In Pakistan, the
business industry is working at large scale. Many businesses are run in the
organization and facing all the issues and also obtain many benefits according
to condition of market. The economy of Pakistan also effected due to
enterprises role and their condition. Enterprises in the Pakistan are willing
to expand their business when they find any beneficial opportunity for the
investment and financing. But many financing constraints are also face by the
enterprises because of poor economic condition.
Further the
financing opportunities promote the business transaction and also the revenue
of the enterprise is going to increase. The development level of Pakistan is
occurring according to its economic stability and its import and export condition. So it is very important to handle
the financing constraints related to enterprises because without handling
these, no any organization can run its operations and expand its business in
all levels. Such constraints are considering very important in the development
of business and their proper measurement help the business to operate all its
activities and operations without any hurdle.
Literature Review of
For the growth,
the finance is considering an important pillar. Because this is happen at micro
and macro level of economic. At the level of micro economic, the growth on firm
are influence by the financing constraints that are predicted at micro level.
For all type of enterprises, the access of financing constraints and its impact
appear on the growth. Many organizations that have to utilize the credit
facilities will enhance their growth by major difference. But in Pakistan the
condition is quite different because its financial market is under developed.
The rank of Pakistan is very low in the gross domestic product in the private
sector as compare to other countries held in south Asia.
At the micro
level, similar trend related to working capital is considered which is very
low. As compare to other south Asian countries, the financed of working capital
through commercial banks are very low. Pakistan has to face financial Deepening
because on the severity of finance , its manager’s perception is very low as
compare to other countries and it also observe that almost 7 % finance occur
with external factor only and almost 83% finance occur with retain earning and
internal funds of enterprises. According to survey, 40% organization of
Pakistan reported that finance is the major constraints in the growth and
development. But with the passage of time, the economic environment is going to
be in better form as public sector is going to involve in borrowing and non
performing loans also provided.
The discussion on
the economic growth and finance at micro and macro level is remaining in every
period. On the per capita income and on growth, the positive impact goes due to
development in the financial sector at macro level. With the eight development growth
the financial development is consistent and also effects the improvements in
the economic efficiency and physical capital accumulation. Due to lack of
finance how the growth of enterprise effected at the micro level.
The study of
financial constraints indicates the greater financial development which also
provides opportunity by increasing the external finance. To increase the
internal capital ability is limited in small and medium enterprises. Normally
business or organization willing to invest in the opportunities that have
potential for growth and its opportunities. So for growth the greater finance
facilities are considering an essential for the long term development. Normally
the organizations that are depending on external finance will grow faster
because they are rely on the external financial opportunities. Because sometime
the internal financing activities are very crucial and it’s very complicated
for the organization to utilize its internal finance for growth and further
development.
When the demand of
product is going to increase the growth of organization should be increase and
its supply in the market fulfill with the need of the users. There are many factors
that explain that financing constrains appear when the production of the
organization going to increase at specified level. Then the organization wants
to utilize its all type of resources and its credibility and get the maximum
finance to accomplish its requirement. The size of the organization also matter
a lot in managing its financing constraints because many financial institutions
willing to give loans to large companies as compare to small and medium
organizations.
Because they consider their financial
condition and their size and their market share so they prefer to give loan and
provide financial help to large size organizations as compare to small and
medium size organizations. Organizations settle the mitigation measurements to
handle all type of financing constraints because this will affect their
reputation among its competitors and also in the market. There are also many
organization who are prefer to export and import the product to overcome their financing
constraints , in such condition they have to manage its productivity and also
prefer the high quality production to meet the international market standards.
This will also provide more financing help and manage the requirement of the
organization according to its development need.
No doubt the
financing constraints are the major hurdle in the development and growth of the
enterprises in the Pakistan but it’s the management of the organization that
find out best solution related to their financial need and also handle these
issues without effecting the reputation of the organization because once the
image of the organization effected then it’s great difficult to rebuild among
many competitors. The economic condition of Pakistan is also not very suitable
to obtain all type of financing facilities but to operate its functions, it is
very important for the organizations to access the financing facilities to
manage all its operations and also increase its development and growth
opportunities to get the maximum share of market in the Pakistan.
Significance of the
study:
This is a fact
that financing constraints are the major part of every organization but proper
management and accounting techniques are going to utilize then this issue can
be resolve to some extent. Because
mitigation measurement are also important to resolve this type of issue because
when an organization come in the market and product any product then its target
is to exist in the market and capture maximum share of profit. Because of
fluctuating economic condition of Pakistan, its business and their financial
condition also fluctuate and must be manageable according to current condition.
The need of finance is appear when the enterprise wants to expand its growth
and the growth is going to increase when the product demand is going to
increase so, the effect of supply and demand of the market also effect the
financing requirement of the organizations.
The financing
constraints are the major hurdle in the growth and development of the
organizations because without finance no any organization can expand its
business and its growth so financing is very essential for every type of
organization. Internal and external resource of finance also consider because
sometime the internal finance is not sufficient to meet all the requirement of
the organization so due to this problem the organization need to get help from
any financial Institution and obtain some sort of loan for the purpose of
development.
Research questions of
·
Financial Constraints improves financing more
efficiently?
·
Financial Constraints are hurdles for growth and
development?
·
Is Financial Constraints issue can be solved due
to mitigation measurement?
·
A factor that helps to idealize resources
increases its measurement efficiency?
·
Managing current conditions can stable the
economic condition of country?
Data description of
Data description
explains about the data and the economic systems utilized in the analysis of
financial constraints in the organizations within Pakistan. This is a smooth
process that makes sure about the figures and facts that whether the economy is
going n a track or whether it is a need to take further steps for improvement. Data
description helps in making the working’s improved and highlighted and to keep
an eye on the progress rate as well. The more efficiently you descript and
collect your data to summarize the better you’ll be able to get accurate ideas
and exact knowledge about your financial aspects of your organizations.
Economic model:
The
economic model is the essential part of the organization to manage all its
financing constraints because there are many elements that affect the economy
and the economic model help to manage the financial constraints of the
organization. The financial constraints affect the economy in negative
direction and it will damage the progress and development of economy because
when the opportunities for investment going to minimize and the organization
didn’t find any right option for the investment or to expand their business
then it will affect the economy and the performance of the economy going down
due to these reasons. There are many different models that support the economy
and also help to manage these financial constraints by supporting the
organization through different techniques. Economic model establish a balance
between demand and supply of the market and the dealing of business at national
and international level become more comprehensive and manageable to run the
operations of the organization to establish the investment opportunities and
also handle the financial constraints at maximum level to manage all the issues
of the organization.
Estimation techniques:
This
study helps to manage the estimation techniques for the financial
constraints. Because these will effect
he performance and scope of the organization at industrial level. Further we
can explain these issues by handling the financial constrains with effective
techniques and methodologies because these techniques are effective used in the
organization and help the organization to enhance the scope of the organization
with effective techniques. These techniques handle the problem of financing and
investment opportunities that arise different problem for the organizations
with dependent variables and affect the model of economic with great efforts.
Investment is utilize as variable that explain the possibilities and also point
out such estimations with panel of data according to its capability and manage
for the organization according to its requirements and financing needs. So
financial constraints must be managed through effective techniques and methods
within the organization to enhance the financial and investment opportunities.
Conclusion of
At the end of discussion, we conclude that in Pakistan many
enterprises have to face financing constraints for further development and
growth and they have to manage this constraints with proper mitigation
measurements that maintain their position and also enhance their growth to get
maximum revenue and also the size of organization effect its financing
activities because the finance access is not easy where the economic condition
of the country is also not stable.
So Pakistan and
its enterprises have to manage its financing constraints and get the financing
facilities according to its size and growth in the market at maximum level
because everyone want to get maximum benefits and when any constraints appear
in the path of growth, the enterprises have to settle such issues because in
economic condition of Pakistan it is very difficult to run and maintain its
business with such financial institutions that have many restrictions and rules
and regulations of loan and also get proper interest rate in specified time. So
the financing constraints are very important to handle and make a better path
for the growth of enterprises at large scale.
Reference of The financing constraints is to explore:
Ahmad, S. (2016). Financial Constraints, Firms’
Investments and Performance of Manufacturing
Sector of Pakistan: A Cross Industry Analysis. 259–273.
Beck, T. (2006). Small
and Medium-size Enterprises: Access to Finance as a Growth Constraint. 3 (11), 2931-2943.
Bibi, R. (2016).
Investment-cash flow sensitivity and financial constraints: evidence from Pakistan. 1-29.
CHICHTI, W. M.
(september 2017). FINANCING CONSTRAINTS THEORY:ANARRATIVE APPROACH. 465-490.
Hamid, H. A. (2011).
Financing Constraints: Determinants and Implications for. 317-346.
HASHMI, S. A. (2018).
Financial Constraints, Firms’ Investments and Performance of Manufacturing
Sector of Pakistan: A Cross Industry Analysis. 259-273.
Husain, I. (2005). SME
Financing: Issues and Strategies. 1-9.
Sbp.org.pk. (2019).
Hiring of Consultancy for Comprehensive analysis of supply and demand- side constraints in financing to SMEs. 1-9.
Thorsten Beck, A. D.-K.
(2006). Small and Medium-size Enterprises: Access to Finance as a Growth Constraint.
2931-2943.
Vermeulen, P. (2013).
nvestment and Financing Constraints: What Does the Data Tell? 1-25 .
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