Advances in Consumer Research
Issue 4 : 1474-1482
Original Article
Financing Small and Medium Enterprises in India: Overcoming Volatility and Market Driven Challenges
 ,
1
Professor, Economics and Finance, Xavier Institute of Management and Entrepreneurship (XIME), Bangalore.
2
Riny Raju, Research Scholar, Department of Economics, Government College for Women, (University of Kerala), Thiruvananthapuram.
Abstract

This study explores the financing challenges faced by small and medium enterprises (SMEs) in India, particularly focusing on market volatility and structural constraints in capital accessibility. Using daily data from the Nifty SME Emerge and Nifty 50 indices from April, 2018 to March 2025, the paper conducts trend and correlation analyses as well as a GARCH (1, 1) model to examine the return dynamics and volatility linkages between SME and broader market performances. Findings reveal that while SME returns exhibit sensitivity to the Nifty 50, the overall explanatory power remains limited, indicating significant idiosyncratic behaviour. Volatility clustering and asymmetric responses to market shocks further underscore the vulnerability of SME financing to external disturbances. The paper calls for the development of inclusive financial instruments, policy interventions, and investor engagement mechanisms to ensure the stability and scalability of the SME sector in India's evolving financial ecosystem.

Keywords
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