Application of Artificial Intelligence in Capital Structure for Micro, Small and Medium Enterprises - A Study with Special Reference to Pimpri Chinchwad Municipal Corporation Area

Deepali Nilesh Jogdand

doi:10.69968/ijisem.2025v3si2444-449

Authors

Deepali Nilesh Jogdand Research Scholar, Dr Vithalrao Vikhe Patil Foundation IBMRD, Ahmednagar

DOI:

https://doi.org/10.69968/ijisem.2025v3si2444-449

Keywords:

Artificial Intelligence, Capital Structure, Financial Decision-Making, Leverage Schedules, Al Adoption, MSMES

Abstract

This paper aims to study the potential bearing of artificial intelligence (AI) on capital structure depending upon historical data only by focusing on MSMEs operating in Pimpri Chinchwad Municipal Organisation (PCMC). This study aims to determine the impact of artificial intelligence (AI) on financial decision-making-based components of MSMEs finance by studying their composition-related ratios, leverage schedules, and AI adoption. The review will account for these point sources, such as government publications and industry databases, with robust estimates. Statistical analyses are employed—mainly through different statistical tests (e.g., multiple regression analyses, ANOVA testing)—which implied that AI use was benign with financial performance measures, such as well-performed higher ROEs and lower Des. The findings reported above suggest a positive association between the use of AI and financial performance measures, as revealed by larger ROEs and lesser DEs. AI cap structure efficiency: Tech and HealthCare do, old-world challenged It also highlights the ground-breaking potential benefits of AI for MSMEs in terms of net income and financial risk, as well as the obstacles to implementation. Our report also ca ls for further research to develop AI tools that are accessible and custom-designed for micro, small, and medium enterprises (MSMEs).

References

[1] Babu, M., & Rao, R. (2022). AI in MSMEs: Bridging financial management gaps. , 15(3), 123-142. https://doi.org/10.1007/s40847-021-00172-3

[2] Banerjee, A., & Das, K. (2020). Artificial intelligence and small business finance: A systematic review. , 56(1), 41-60. https://doi.org/10.1007/s1 187-019-00366-8

[3] Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: Toward a next generation of insights. , 37(2), 471-482. https://doi.org/10.25300/MISQ/2013/37.2.08

[4] Brown, R., & Lee, N. (2021). SME financing after the global financial crisis:The role of trade credit. , 123(5), 124-133. https://doi.org/10.1016/j.jbusres.2020.09.054

[5] Chatterjee, S., & Kar, A. K. (2020). AI applications in financial markets: A comprehensive review. , 50, 142-156. https://doi.org/10.1016/j.ijinfomgt.2019.05.017

[6] Fuster, A., Goldsmith-Pinkham, P., Ramadorai, T., & Walther, A. (2020). Predictably unequal? The effects of machine learning on credit markets., 75(5), 2327-2360. https://doi.org/10.11 1/jofi.12942

[7] Ghobakhloo, M. (2020). Industry 4.0, digitization, and opportunities for sustainability. , 252, 119869. https://doi.org/10.1016/j.jclepro.2019.119869

[8] Ghosh, A., & Rajan, P. (2022). Impact of inte ligence on SME financing in India.8(1),12-21. https://doi.org/10.1186/s40854-021-00307-0

[9] Gupta, P., & Jain, A. (2021). Digital transformation and SME productivity: The role of AI. , 59(4),687-709. https://doi. org/10.1080/00472778.2020.1805537

[10] Haefner, N., Wincent, J., Parida, V., & Gassmann, O. (2021). Artificial intelligence and innovation management: A review, framework, and research agenda. 162, 120395. https://doi.org/10.1016/j.techfore.2020.120395

[11] Khan, M. A., & Javaid, M. (2020). Financial inclusion and the role of AI in empowering MSMEs: A case study from South Asia. , 9(2),214-229. https://doi.org/10.1080/13504851.2020.1825302

[12] Kumar, N., Mishra, S., & Sharma, P. (2020). The role of AI in reshaping SME capital structures.15(2),91-105. https://doi.org/10.5539/ijbm.v15n2p91

[13] Lee, I., & Shin, Y. J. (2020). Fintech: Ecosystem, business models, investment decisions, and challenges. , 63(1), 35-45. https://doi.org/10. 1016/j.bushor.2019.09.003

[14] Liao, Y., Deschamps, F., Loures, E. D. F. R., & Ramos, L. F. P. (2017). Past, present, and future of Industry 4.0 – A systematic literature review and research agenda proposal. ,55(12), 3609-3629. https://doi.org/10.1080/00207543.2017.1308576

[15] Liu, J., Lu, Y., & Yang, L. (2021). The impact of AI on capital structure and performance of SMEs: An empirical study. , 99, 105489. https://doi.org/10.1016/j.econmod.2021.105489

[16] Mishra, A., & Rao, K. (2021). Role of artificial intelligence in enhancing financial inclusion of MSMEs. , 7(3), 44-58. https://doi.org/10.1186/s40854-021-00239-9

[17] Mishra, P., & Pattnaik, S. (2020). AI-powered fintech and MSME development: An Indian perspective. 9(1), 43-57. https://doi.org/10.7545/ajip.2020.9.1.043

[18] [19]. Nguyen, Q., & Nguyen, T. (2022). Financial performance and AI-driven decision-making in SMEs. , 25(2), 112-126. https://doi.org/10.1016/j.finmar.2021.100453

[19] Noronha, J., & Sen, A. (2021). Impact of AI adoption on Indian MSMEs' capital structure decisions. , 67(4), 1448-1456. https://doi.org/10.1287/mnsc.2020.3650

[20] Pan, Y., Zhang, Z., & Wang, W. (2020). The effects of digital transformation on SME financing and investment decisions. , 3(2), 173-186. https://doi.org/10.1007/s42521-019-00025-4

[21] Pradhan, R. P., & Bagchi, T. P. (2021). AI-powered financial models for MSME capital optimization. , 31(2), 35-52. https://doi.org/10.53703/001c.21082

[22] Raman, A., & Bapna, R. (2021). Digitization, AI, and SME financial decisions: Evidence from India. , 36(4), 106127. https://doi.org/10.1016/j.jbusvent.2020.106127

[23] Singh, P., & Gaur, R. (2020). AI-enabled decision support systems for financial management in MSMEs. ,58(4), 437-455. https://doi.org/10.1007/s10693-019-00308-4

[24] Sharma, A., & Kaur, S. (2022). Artificial intelligence and MSME capital. structure: An empirical study from India.60(1), 233-251. https://doi.org/10.1080/00472778.2021.1906311

[25] Tripathi, S., & Tiwari, R. (2020). Fintech and AI solutions for MSMEs: A pathway for capital structure optimization. , 28(2), 290-309. https://doi.org/10.1002/ijfe.2167