THE ATTITUDE OF ENTREPRENEURS TOWARDS FINANCIAL INSTITUTIONS INTRODUCTION

In a labour abundant and capital scarce country like India, small scale industries have come to occupy a significant position in the planned industrialization of the economy. Most of the small industries have low capital intensity and high potential for employment generation. Besides, they possess locational flexibility which serves as an effective instrument for achieving wide dispersal of industries. Further, small scale units serve as a means for bringing forth indigenous entrepreneurship and savings particularly in semi urban and rural areas.To provide financial assistance to entrepreneurs the government has set up a number of special financial institutions besides commercial banks in central and state level. The small scale industries have been recognized as a priority sector and the banks have been advised by the Reserve bank of India to give special attention to the credit requirements of these industries.

In the present study an attempt has been made to analyse the level of satisfaction of the respondents selected for the study with regard to the services rendered by the financial institutions Satisfaction cannot be measured in absolute terms. It depends on the relation between what one expects to have and what one is provided with. However it can be measured indirectly with the help of an appropriate scaling technique. An attitude scale was designed for the purpose of measuring the extent of entrepreneur’s attitude to various services rendered by the institutions. In the present study, level of satisfaction of the entrepreneurs of small-scale units (a sample of 300 units) were collected from Theni District in Tamil Nadu and interpreted with the help of Chi-square test.

 ATTITUDE SCALE

The attitude of the entrepreneurs to the services rendered by the financial institutions in the study area was measured with the help of an attitude scale, for which seven components were identified. For each of such components, five explanatory statements were developed and thus altogether there were 35 positive statements identified for measurement. The responses of the sample entrepreneurs to each statement were elicited with the help of Likert’s scale, classified into five scores for strongly agree, four for agree, three for no opinion, two for disagree and one for strongly disagree.

The level of satisfaction of the entrepreneurs of small-scale units has been classified into three categories, namely low level, medium level and high level for the analytical purposes. For this the total score of each respondent is computed for analysing the attitude of respondents to the services of institutions. On the basis of the total score, mean (X) and standard deviations (σ) were computed. With the help of these, the levels of attitude of entrepreneurs were computed and categorised as low level, medium level and high level.

Low level attitude               –          X – σ

Medium level attitude        –         (X + σ) – (X – σ)

High level attitude              –         X + σ

It was found that out of the 300 respondents, 51 entrepreneurs were under high level attitude, 194 entrepreneurs were under medium level attitude and 55 members were under low level attitude regarding the performance of institutions.

Factors Influencing the Level of Attitude of respondents to the Services of Financial Institutions

The independent factors such as age, sex, marital status, education level, community, family members, age of the enterprises, nature of business, type of business and location of the unit of the entrepreneurs were considered for analysis. An effort was made to find out whether such independent variables influenced different levels of attitude of the respondents significantly with the help of Chi-square test.

Relationship between Age Group and Level of Attitude of Respondents to Financial Institutions

To become an entrepreneur, one is expected to attain the age of majority and show interest in entrepreneurship. He or she is expected to be capable of taking appropriate decision for a problem faced in the business only when he grows into majority. Generally the years go by, he or she gains more knowledge and skill through experience in the business. In order to study the relationship between age group and level of attitude, the respondents were classified according to their age and the results of Chi-square are presented in Table 1.

Table 1 Age Group of the Respondents, their Level of Attitude and Results of Chi-Square

 

 

Sl. No

[

Age Group

(Years)

 

Number of Respondents

 

 

Total

 

High

 

Medium

 

Low

 

1.

 

Below 25

 

10

(31.25)

 

12

(37.50)

 

10

(31.25)

 

32

(10.66)

 

2. 25-40 19

(13.57)

97

(69.29)

24

(17.14)

140

(46.67)

 

3. Above 40 22

(17.19)

 

85

(66.40)

 

21

(16.41)

128

(42.67)

 

 

 

 

Total

 

 

51

(17.00)

 

194

(64.67)

 

55

(18.33)

 

300

(100)

 

 

c2 = 12.25*

For = 4, c20.05 = 9.49

Source: Computed data

Figures given in parentheses denote percentages

Table 1 shows that out of total respondents, those belonging to the age group of ‘25-40 years’ formed the majority. In this group, 19 (13.57%) respondents had high level attitude, 97 (69.29%) respondents had medium level attitude and 24 (17.14%) had only low level attitude. Of the 128 respondents who were in the age group of ‘above 40’, 22 (17.19%) respondents had high level attitude, 85 (66.40%) had medium level attitude and 21 (16.41%) respondents had low level attitude. Among 32 respondents belonging to the age group of ‘below 25 years’, 10 (31.25%) respondents had high level attitude, 12 (37.50%) had medium level attitude and 10 (31.25%) respondents had low level attitude. In other words, in all these three categories, majority of the respondents had medium level attitude and the calculated value of c2 (12.25) is greater than its corresponding table value (9.49%), the null hypothesis ‘the age of the respondents does not have any significant relationship with the level of attitude to the institutional support’ is rejected. Therefore, it is concluded that the age level of the respondents had significantly influenced their level of attitude to the institutional support.

Relationship between Sex and Level of Attitude of Respondents to Financial Institutions

Sex is an important factor that influences the level of attitude of entrepreneurs to the institutional support. The level of attitude of male entrepreneurs is supposed to be high compared to that of female entrepreneurs. Thus there may be a direct relationship between these two variables. In order to test the relationship, data relating to the level of attitude of male and female entrepreneurs were collected and classified and the results of Chi-square are presented in Table 2.

TABLE 2 Sex of the Respondents, their Level of Attitude and Results of Chi-Square

 

 

Sl. No

 

 

 

Sex

 

Number of Respondents

 

 

 

Total

 

High

 

Medium

 

Low

 

1.

 

Male

 

 

41

(15.47)

 

 

 

179

(67.55)

 

 

 

45

(16.98)

 

 

265

(88.33)

 

2.   Female 10

(28.57)

15

(42.86)

10

(28.57)

35

(11.67)

 

 

 

Total

 

 

51

(17.00)

 

194

(64.67)

 

55

(18.33)

 

300

(100)

 

c2 = 8.30*

For = 2, c20.05 = 5.9

Source: Computed data

Figures given in parentheses denote percentages

It is clear from Table 2 that a majority of 265 respondents were male. Of them, 41(15.47%) respondents had high level attitude, 179 (67.55%) respondents had medium level attitude and 45 (16.98%) respondents had low level attitude. Of the 35 female members, 10 (28.57%) respondents had high level attitude, 15 (42.86%) respondents had medium level attitude and 10 (28.57%) respondents had low level attitude. In these two categories, a majority of the respondents had medium level attitude and  the chi-square test reveals that the calculated value of c2 (8.30) is greater than its corresponding table value (5.99%), the null hypothesis ‘the sex of the respondents does not have any significant relationship with the level of attitude to the institutional support’ is rejected. Therefore, it is concluded that the sex of the respondents had significantly influenced their level of attitude to the institutional support.

Relationship between Education Level and Level of Attitude of Respondents to Financial Institutions

Education, entrepreneurship and development are interrelated. Education helps in the development of capabilities of individuals which facilitates the emergence and growth of entrepreneurship. The high level of education and training may enable the entrepreneur to sharpen their entrepreneurship talent more effectively and efficiently Higher the educational level, greater will be the level of attitude and lower the educational level, lesser will be the level of attitude. Therefore the level of education has a direct relationship with the attitude of the members towards the institutional support. The level of attitude on the basis of education level and the results of Chi-square are presented in Table 3.

TABLE 3.Education Level of the Respondents, their Level of Attitude and Results of Chi-Square

 

 

Sl. No

 

 

Education Level

 

Number of Respondents

 

 

Total

 

High

 

Medium

 

Low

 

1.

 

Up to S.S.L.C

 

9

(14.75)

 

43

(70.50)

 

9

(14.75)

 

61

(20.33)

 

 2.   Graduation 16

(12.90)

98

(79.03)

10

(8.07)

124

(41.33)

 

 3.   Technical/

Engineering

26

(22.61)

[

53

(46.09)

36

(31.30)

115

(38.34)

 

 

 

Total

 

51

(17.00)

 

 

194

(64.67)

 

 

55

(18.33)

 

 

300

(100)

 

 

c2 = 32.06*

For = 4, c20.05 = 9.49

 

Source: Computed data

Figures given in parentheses denote percentages

Table 3 discloses that out of 300 respondents, graduates formed the majority of respondents. Out of the respondents under graduation level, 16 (12.90%) respondents had high level attitude, 98 (79.03%) respondents had medium level attitude and 10 (8.07%) possessed low level attitude. Of the 115 respondents who were at either technical or engineering level, 26 (22.61%) respondents had high level attitude, 53 (46.09%) respondents had medium level attitude and 36 (31.30%) had low level attitude. Among 61 respondents having only S.S.L.C, 9 (14.75%) respondents had high level attitude, 43 (70.50%) respondents had medium level attitude and another nine (14.75%) respondents had low level attitude and  the chi-square test reveals that the calculated value of c2 (32.06) is higher than its corresponding table value (9.49), the null hypothesis ‘the education level of the respondents does not have any significant relationship with the level of attitude to the institutional support’ is rejected. Therefore, it is concluded that the education level of the respondents had significantly influenced their level of attitude to the institutional support.  

Relationship between Caste and Level of Attitude of Respondents to Financial Institutions

Caste is also an important social factor that is expected to influence the level of attitude of entrepreneurs to the institutional support. The level of attitude of high caste entrepreneurs is supposed to be high compared to that of low caste entrepreneurs. Thus there is a direct relationship between these two variables. In order to test the relationship, the data of the level of attitude of forward and backward and scheduled caste entrepreneurs were collected and classified and the results of Chi-square are presented in Table 4.

TABLE 4 Caste of the Respondents, their Level of Attitude and Results of Chi-Square

 

 

Sl. No

 

 

Caste

 

Number of Respondents

 

 

Total

 

High

 

Medium

 

Low

1.

 

 Forward and

backward

41

(16.87)

156

(64.20)

46

(18.93)

243

(81.00)

 

2.  Scheduled caste 10

(17.54)

38

(66.67)

9

(15.79)

57

(19.00)

 

 

 

Total

 

51

(17.00)

 

194

(64.67)

 

55

(18.33)

[[]]]]]]

 

300

(100)

 

 

c2 = 0.304NS

 

For = 2, c20.05 = 5.99

 

Source: Computed data

Figures given in parentheses denote percentages

It is clear from Table 4 that a majority of 243 respondents came under the category of forward and backward castes. Of them 41 (16.87%) respondents had high level attitude, 156 (64.20%) respondents had medium level attitude and 46 (18.93%) respondents had low level attitude. Of the 57 scheduled caste members, 10 (17.54%) respondents had high level attitude, 38 (66.67%) respondents had medium level attitude and 9 (15.79%) respondents had low level attitude. As revealed by the results, the calculated value of c2 (0.304) is lesser than its corresponding table value (5.99), the null hypothesis is accepted. Therefore, it is concluded that the caste of the respondents had no significant relationship with their level of attitude to the institutional support.

Relationship between Nature of Business and Level of Attitude of Respondents to Financial Institutions

Level of attitude of respondents towards the services rendered by institutions also depends on the nature of business. Inheritance of the family business has come to the hands of an entrepreneur automatically. Thus for the analysis, the sample respondents are classified into those who started their own business and those who have got the business by inheritance. In order to study the relationship between nature of business and level of attitude of respondents and test the relationship, data were collected and analysed in this respect and the results of Chi-square are presented in Table 5.

TABLE 5 Nature of Business, Level of Attitude and Results of Chi-Square

 

Sl. No

 

Nature of Business

Number of Respondents  

Total

high Medium Low
1.   Newly started 41

(19.16)

 

128

(59.81)

 

45

(21.03)

 

214

(71.33)

 

2.   Inheritance 10

(11.63)

66

(76.74)

10

(11.63)

86

(28.67)

 

 

Total

51

(17.00)

194

(64.67)

55

(18.33)

300

(100)

 

 

c2 = 7.72*

For = 2, c20.05 = 5.99

 

Source: Computed data

Figures given in parentheses denote percentages

Table 5 reveals that a majority of 214 entrepreneurial units were newly started by the respondents. Of them, 41 (19.16%) respondents had high level attitude, 128 (59.81%) respondents had medium level attitude and 45 (21.03%) respondents had low level attitude respectively. Of the 86 respondents who inherited their business from their forefathers, 10 (11.63%) respondents had high level attitude, 66 (76.74%) respondents had medium level attitude and 10 (11.63%) respondents had low level attitude respectively. As revealed by the results, the calculated value of c2 (7.72) is greater than its corresponding table value (5.99), the null hypothesis ‘the nature of business does not have any significant relationship with the level of attitude to the institutional support’ is rejected. Therefore, it is concluded that the nature of business of the respondents had significant relationship with their level of attitude to the institutional support.

Relationship between Place of Business and Level of Attitude of Respondents to Financial Institutions

The level of attitude of respondents having business in industrial estate is supposed to be high compared to the level of attitude of respondents of other units. Thus there is a direct relationship between these two variables. In order to test the relationship, data of the attitude of entrepreneurs were collected and classified and the results of Chi-square are presented in Table 6.   

TABLE 6 Place of Business, Level of Attitude and Results of Chi-Square

 

Sl. No

 

Place of Business

Number of Respondents  

Total

High Medium Low
1. Industrial estate 10

(26.32)

19

(50.00)

9

(23.68)

38

(12.67)

 

2. Other places 41

(15.65)

175

(66.79)

46

(17.56)

262

(87.33)

 

 

Total

51

(17.00)

19

(64.67)

55

(18.33)

300

(100)

 

c2 = 3.67NS

For = 2, c20.05 = 5.99

 Source: Computed data

Figures given in parentheses denote percentages

It is clear from Table 6 that a majority of 262 respondents had their business in other places. Of them 41 (15.65%) respondents had high level attitude, 175 (66.79%) respondents had medium level attitude and 46 (17.56%) respondents had low level attitude respectively. Of the 38 units in the industrial estate 10 (26.32%) respondents had high level attitude, 19 (50%) respondents had medium level attitude and 9 (23.68%) respondents had low level attitude respectively. In these two categories, a majority of the respondents had medium level attitude and the calculated value of c2 (3.67) is lesser than its corresponding table value (5.99) the null hypothesis ‘the place of business does not have any significant relationship with the level of attitude to the institutional support’ is accepted. Therefore, it is concluded that the place of business had no significant relationship with their level of attitude to the institutional support.

Conclusion                                             

The foregoing analysis reveals that a high proportion of entrepreneurs have only the medium level attitude towards the services rendered by the financial institutions. The demanding collateral security and third party guarantee and delay in sanctioning the loan are the two major reasons found out for the medium level attitude of the entrepreneurs. To conclude with the words of Mahatma Gandhi a customer is a God in our premises. By entering into our premises, he is giving an opportunity to serve him, but we are not doing any favor by serving him.

References

1.      Narinder Kaur, “New Vistas in Turnaround of Small Business Enterprises”, Entrepreneurship and Small-Scale Industries, Deep and Deep Publications, New Delhi, 2003, p. 151.
2.      Sankar Kumar Sengupta and Suraj Kumar Debnath, “Rural/Village Small-Scale Industries in Indian Scenario: Measures Undertaken for their Promotion”, Entrepreneurship and Small-Scale Industries, Deep and Deep Publications, New Delhi, 2003, p. 132.
3    Limba Goud, S., “Priority Sector Lending: Commercial Bank Lending to SSI”,

Southern Economist, Vol. 48, No. 13, Nov. 1, 2009, pp. 17-20.

 4.  Manickavasagam,V.andVethirajan, C.,“Contribution of Small-Scale  industry to

the Indian Economy”, Facts for You, May 2002, pp. 28-31.

5.  Kamalakanan, K. and Namasivayam. N,”SIDBI and Small-Scale  Industries: A

Study”, Southern Economist, Vol. 45, May 2006, p. 9.


Author

J.Mary Suganthi Bai
Associate Professor in Commerce
Jayaraj Annapackiam College for Women (Autonomous)
Thamarikulam, Periyakulam, Theni District, Tamil Nadu


Published : Banking Finance Magazine, January, 2013