SAJMS - South Asian Journal of Management Sciences

Retail Business Owners Preference: Why not Formal Financing?

Finance is a basic need to run a business and the need of external financing is also required during the business cycle, expansion, growth etc. In this research, Retail Business Owners (RBO’s) were being questioned to find out the reasons for their preference on informal financing rather on formal financing. Karachi was the sample population to investigate the rational of this research. Test of Proportion and Test of Association found that low interest rate, religious restriction and documentation are the major reason for preferring informal financing over formal financing.

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