Entrepreneurial-Specific Characteristics and Access to Finance of SMEs in Khyber Pakhtunkhwa, Pakistan

Small and medium-sized enterprises (SMEs) not only support the country in financial and business aspects but also overcome unemployment by creating job opportunities. The SME sector contributes more than thirty-five percent of the country’s Gross Domestic Product (GDP). The study aims to discover entrepreneurial-specific characteristics and their impact on accessing bank financing. The study collects primary data through questionnaires. Approximately 204 questionnaires were distributed randomly, out of which 192 were returned and analyzed through a binary logit model. Entrepreneurial personal traits play a vital role in obtaining financing from banks and other financial institutions in Pakistan. The study reveals that age and level of education are significant and play a vital role in accessing bank financing in Khyber Pakhtunkhwa (KP). Conversely, gender, experience, and SME skills that entrepreneurs have are insignificant to accessing bank financing in KP. This paper attempts to identify the entrepreneurial-specific characteristics within a large sample size of enterprises and compares the small and medium-sized ones separately in KP, Pakistan. Additionally, the study reveals how an entrepreneur’s personal traits impact the accessibility of bank financing and the need to formulate strategies and policies to strengthen these entrepreneurial-specific characteristics through training, development, and personality growth for the efficient operations of the SME sector in KP, Pakistan. The study is also significant for policymakers, stakeholders, and lenders.