Credit Source and Enterprise Performance in Urban Maharashtra

Shrey Vardhan Bhartia

doi:10.46609/IJSSER.2026.v11i10.028

Title: Credit Source and Enterprise Performance in Urban Maharashtra
Authors: Shrey Vardhan Bhartia
Journal: International Journal of Social Science and Economic Research (IJSSER) ISSN: 2455-8834 Volume: 11 Issue: 10 Publication Date: October 2026 DOI: 10.46609/IJSSER.2026.v11i10.028
\|\| \|\|
Shrey Vardhan Bhartia Oberoi International School, Mumbai, 400063, India
MLA 8 Bhartia, Shrey Vardhan. "Credit Source and Enterprise Performance in Urban Maharashtra." Int. j. of Social Science and Economic Research, vol. 11, no. 10, Oct. 2026, pp. 5843-5868, doi.org/10.46609/IJSSER.2026.v11i10.028. Accessed Oct. 2026. APA 6 Bhartia, S. (2026, October). Credit Source and Enterprise Performance in Urban Maharashtra. Int. j. of Social Science and Economic Research, 11(10), 5843-5868. Retrieved from https://doi.org/10.46609/IJSSER.2026.v11i10.028 Chicago Bhartia, Shrey Vardhan. "Credit Source and Enterprise Performance in Urban Maharashtra." Int. j. of Social Science and Economic Research 11, no. 10 (October 2026), 5843-5868. Accessed October, 2026. https://doi.org/10.46609/IJSSER.2026.v11i10.028.
References [1] . Elgin, C., et al. 2021. Understanding Informality. CEPR Discussion Paper 16497. London: Centre for Economic Policy Research. No DOI assigned. Available at: https://ideas.repec.org/p/cpr/ceprdp/16497.html [2] . Stiglitz, J.E. and Weiss, A. 1981. Credit rationing in markets with imperfect information. Am. Econ. Rev. 71. 393. 410. No DOI assigned. Available at: https://ideas.repec.org/a/aea/aecrev/v71y1981i3p393-410.html [3] . Vidyarani, K. and Maheshkumar, T. 2022. Determinants of access to formal credit for the micro, small and medium enterprises in India: an inter-regional analysis. SEDME. 49. 311. 330. doi: 10.1177/09708464221106273. https://doi.org/10.1177/09708464221106273 [4] . Badola, S. and Mukherjee, S. 2020. Factors influencing access to formal credit of unincorporated enterprises in India: analysis of NSSO's unit-level data. NIPFP Working Paper 20/326. New Delhi: National Institute of Public Finance and Policy. No DOI assigned. Available at: https://nipfp.org.in/media/medialibrary/2020/12/WP_326_2020.pdf [5] . La Porta, R. and Shleifer, A. 2014. Informality and development. J. Econ. Perspect. 28. 109. 126. doi: 10.1257/jep.28.3.109. https://doi.org/10.1257/jep.28.3.109 [6] . De Mel, S., et al. 2008. Returns to capital in microenterprises: evidence from a field experiment. Q. J. Econ. 123. 1329. 1372. doi: 10.1162/qjec.2008.123.4.1329. https://doi.org/10.1162/qjec.2008.123.4.1329 [7] . Posti, L., et al. 2025. Returns on informal and formal finance for Indian informal firms: a pseudo panel data analysis. Empirica. 52. 591. 611. doi: 10.1007/s10663-025-09650-6. https://doi.org/10.1007/s10663-025-09650-6 [8] . Kumarasamy, D., et al. 2024. Financial accessibility and MSME's labour productivity: evidence from developing countries. Indian Growth Dev. Rev. 17. 186. 206. doi: 10.1108/IGDR-08-2023-0115. https://doi.org/10.1108/IGDR-08-2023-0115 [9] . Ayyagari, M., et al. 2010. Formal versus informal finance: evidence from China. Rev. Financ. Stud. 23. 3048. 3097. doi: 10.1093/rfs/hhq030. https://doi.org/10.1093/rfs/hhq030 [10] . Degryse, H., et al. 2016. Informal or formal financing? Evidence on the co-funding of Chinese firms. J. Financ. Intermed. 27. 31. 50. doi: 10.1016/j.jfi.2016.05.003. https://doi.org/10.1016/j.jfi.2016.05.003 [11] . Dutta, M. and Dhar, N.S. 2020. Credit constraint and intra-country production reorganization: evidence from the unorganized textile industry in Maharashtra. J. Econ. Stud. 47. 217. 230. doi: 10.1108/JES-09-2018-0307. https://doi.org/10.1108/JES-09-2018-0307 [12] . Gautam, A. and Dhanya, M.B. 2026. Unveiling the dynamics of India's unorganised sector: insights from ASUSE. Econ. Polit. Wkly. 61. No DOI assigned. Available at: https://www.epw.in/journal/2026/10/special-articles/unveiling-dynamics-indias-unorganised-sector.html [13] . Ministry of Statistics and Programme Implementation. 2025. Annual Survey of Unincorporated Sector Enterprises 2023-24. New Delhi: Government of India. No DOI assigned. Available at: https://www.mospi.gov.in/ [14] . Banerjee, A.V. and Duflo, E. 2014. Do firms want to borrow more? Testing credit constraints using a directed lending program. Rev. Econ. Stud. 81. 572. 607. doi: 10.1093/restud/rdt046. https://doi.org/10.1093/restud/rdt046 [15] . Raj, R.S.N. and Sen, K. 2015. Finance constraints and firm transition in the informal sector: evidence from Indian manufacturing. Oxf. Dev. Stud. 43. 123. 143. doi: 10.1080/13600818.2014.972352. https://doi.org/10.1080/13600818.2014.972352 [16] . Gang, I.N., et al. 2020. Finance, Gender, and Entrepreneurship: India's Informal Sector Firms. GLO Discussion Paper 708. Essen: Global Labor Organization. No DOI assigned. Available at: https://ideas.repec.org/p/zbw/glodps/708.html [17] . De Mel, S., et al. 2009. Are women more credit constrained? Experimental evidence on gender and microenterprise returns. Am. Econ. J. Appl. Econ. 1. 1. 32. doi: 10.1257/app.1.3.1. https://doi.org/10.1257/app.1.3.1
ABSTRACT: Fewer than one unincorporated enterprise in ten in urban Maharashtra holds an outstanding loan. This paper asks whether formal and informal credit are associated with enterprise performance, and whether the two differ. Using three rounds of the Annual Survey of Unincorporated Sector Enterprises, 50,992 enterprises from 2021-22 to 2023-24, gross value added is regressed on separate indicators for institutional and non-institutional credit with district-clustered standard errors. Formal credit is associated with gross value added about 17 percent higher. Informal credit shows none, and equality of the two is rejected at p = 0.00002. A survey of 18 market enterprises suggests ASUSE may undermeasure informal credit rather than measure it imprecisely. Supplier credit dominates there and is priced as a markup on goods, so it carries no outstanding amount for the secondary survey to record. Credit is not randomly assigned, so these are upper bounds on any causal effect.

IJSSER is Member of