Keywords
leverage
GDP
Tangibility
liquidity
How to Cite
Abstract
This research examined the effect of firm-specific factors on the profitability of Indian small and medium-sized enterprises (SMEs). The analysis depended on secondary data from 17 textile SMEs in Tamil Nadu over the period 2010 to 2020. The researchers used panel data estimation methods to analyze the connection between the dependent (profitability) & independent variables. The findings indicate that the random effects model was the most appropriate estimation technique, as confirmed by the Hausman test. Key results show that leverage and GDP growth positively and significantly influence the profitability of the sampled SMEs, while firm size has a strong, negative effect. Growth was found to negatively impact profitability, but the significance was relatively weak. Interestingly, liquidity and asset tangibility were not identified as significant determinants of profitability. The insights from this study offer practical implications for policymakers and SME managers. The outcomes may inform the development of suitable approaches and policies to progress the financial performance of SMEs in India.
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