Principal Component Analysis (PCA):: A Study With Reference to Financial Problems of Micro, Small and Medium Enterprises (MSME) in West Bengal

Abstract

Principal Component Analysis (PCA) is a method of extracting important variables from a large set of variables available in a data set. In layman’s language, PCA is a technique to bring to the fore the major factors that explain the variance of the dependent variable most effectively. This Paper is mainly based on primary data and data mainly collected by using a pretested and precoded schedule of questionaries by personal interview with the MSME entrepreneurs. Mainly principal component analysis has been used to measure the magnitude of financial problems of MSME sectors and to identify the factors which are mostly responsible for financial problems of MSME. By applying PCA it was found that complex formalities, taking too much time to sanction loan and loan limit are the major factors for financial problems of MSME sector.