Modelling the Performance of MSMEs

Micro, small, and medium enterprises (MSMEs) play a vital role in employment and growth but continue to face major challenges such as limited access to finance and markets, restrictive regulations, and vulnerability to external shocks like the COVID-19 pandemic. This chapter presents a comprehensive review of the use of statistical models to explain the performance of MSMEs in the South and Southeast Asian region, with a focus on identifying key determinants that influence and measure their performance. Statistical models, including regression, survival models, structural equation modelling, and machine learning techniques, have been extensively used in the recent literature to capture the complex financial and non-financial dimensions of MSME performance. The synthesis of existing findings demonstrates how advanced modelling techniques can improve risk assessment, policy design, and decision-making for stakeholders. The chapter concludes with recommendations for policymakers and other relevant authorities to select robust models that reveal the true status of MSMEs, allowing their effective use for economic growth in the region.