Impact of financing on the firm's performance: an evidence from Indian small and medium enterprises (SMEs)

The purpose of the study is to empirically evaluate how the listing of small and medium enterprises (SMEs) affects their financial performance. Additionally, it also determines and compares the finding in pre and post listed period considering 2013-2014 to 2016-2017 as pre listed period and 2018-2019 to 2021-2022 as post listed period. 130 SMEs listed on the BSE SME and NSE EMERGE platforms in the year 2017-2018 are considered as sample. The study uses the Generalized Method of Moments (GMM) for regression model. Results concludes that the listed firms are moving towards the use of more equity funds, but the proportion of increasing equity is not that much high as compared to the proportion of falling debt equity ratio. Listing of SMEs also reduces the profitability of these firms. The way that SMEs are financed can be of great interest to a variety of parties, including lenders and the government. Finally, this study finds evidence of an inverted U-shaped relationship between financial structure and financial performance of listed SMEs.