Banking Services and Business Growth of Micro and Small Enterprises in Kageshwori Manohara Municipality

Abstract

Micro and Small Enterprises (MSEs) are an important source of jobs, income and for overall economic development in Nepal. Despite their importance, there is limited research examining how different banking services affect the performance of MSEs at the municipal level, specifically in Kageshwori Manohara Municipality. Therefore, this study fills this void with its analysis of the impact of credit availability, interest rates, digital banking, financial advisory service provision and repayment periods on MSE performance. The study has employed a positivistic research paradigm employing descriptive, correlational and explanatory research designs. Structured questionnaires were completed by 186 MSE owners on behalf of the researcher as primary data collection method using a Five Point Likert Scale. The data were analyzed by the use of the three statistical methods which include; descriptive statistics, correlation and multiple regression analysis. The findings from this analysis show that each variable related to banking services have a positive relationship with business growth. Through the regression results, it has been found out that access to credit, interest rate (the rate at which an individual or entity borrows money), financial advisory services, and loan repayment period have a statistically significant impact on business growth while digital banking does not. also, through the regression results, it has also been identified that among all the variables used in this model, loan repayment period is the most influential factor of business growth. In conclusion, this study finds that MSEs need flexible financing options and effective financial advisory support for their sustainable growth. Practically, the findings of this study will be useful for banks and policymakers who design entrepreneur-friendly financial services. Academically, this study enriches the literature on banking service variables and enterprise growth in Nepalese context and provides a base for future research.