Abstract
Market capitalization (market cap) is indispensable for the capital growth of micro, small and medium enterprises (MSMEs) in developing countries as it strengthens credit quality and optimizes their internal stability, MSMEs in developing Asian economies are particularly under limelight due to the lack of effective market cap strategies. Accordingly, this study aims to explore the methods to optimize the market cap of Asian MSMEs by contextualizing the factors of credit quality. We operationalized non-performing loans (NPLs), loans outstanding (LO), and non-bank financing (NBF) as the factors of credit quality and examined their impact on market cap. The panel data between 2011 to 2020 was analyzed to classify the factors of credit quality and their impact on market cap. The findings deliberate that NPLs, LO, and NBF serve as the indicators of credit quality. Precisely, our findings indicate that NPLs have an insignificant and positive effect while LO and NBF have a significant (strong/moderate) and positive effect on the market cap of MSMEs. This study contributes to suggesting economic diversification strategies by capturing a better market share for MSMEs coupled with dynamic indicators of credit quality.