Abstract
Micro, small and medium enterprises are the building blocks of any economy across the globe. By and large, 40% share to GDP is contributed by the MSMEs across the world and in Pakistan  as well. But unfortunately, banks just offer 7- 8% of the total loans/funds to MSMEs which is pretty nominal amount. The main purpose of conducting this research study was to examine the  hurdles that refrain MSMEs access to finance of banks especially in Khyber Pakhtunkhwa. For that purpose, 410 MSMEs from retailing, wholesaling, manufacturing and services sectors in  Peshawar and Bannu were randomly surveyed through personally-administered questionnaires. Items of Questionnaire was partially adopted, adapted and developed so as to fulfil the needs of research study. Questionnaire of the study contained 39 items in total. Correlations, multiple regression analysis along-with normality test (Shapiro-wilk test) were conducted for analysis  purpose. After analysis, researcher came to the conclusions that, low financial literacy and training of MSMEs entrepreneurs, cumbersome requirements of banks and non-credible recordkeeping by MSMEs were the main hurdles that impeded the MSMEs access to finance of banks in Khyber Pakhtunkhwa. On the basis of research findings, researchers recommended that, policymakers should take a closer  look over those prescriber problems and eradicate by creating such environments of skill developments and training whereby the entrepreneurs and related workforce of MSMEs can enhance  their financial know-how and skills. Furthermore, banks should restructure their loan granting requirements in such a way that MSMEs can meet those requirements easily. Lastly, MSMEs are  supposed to adopt sophisticated accounting techniques and get rid of daybook approaches (i.e. Roznaamcha) so as to their business transaction records credible and ultimately get full financial  access to banks.
Keywords: GDP, MSMEs, Shapiro-Wilk test. Daybook (Roznaamcha).