This study demonstrates that cash-flow discipline and budgeting rigor improve liquidity and lower APR in MSMEs, highlighting effective finance management.
Key Points
A one-standard-deviation increase in cash-flow discipline adds about 6.2 liquidity buffer days and decreases effective APR by approximately 120 basis points.
Improvements in budgeting rigor cut APR by around 90 basis points and extend time-to-liquidity-shortfall by nearly 1.8 weeks, benefiting MSMEs significantly.
The study utilized a sequential explanatory design, with data from three panel waves to assess effects of routine financial practices on MSME outcomes.
Results suggest that capability-coupled finance is more effective than generic credit expansion, urging lenders to prioritize verifiable financial discipline.