Investigating the Impact of Fintech Adoption on SME Financing: A Study from an Emerging Market

Abstract

This study aims to analyze the impact of fintech adoption on the SME financing of scheduled banks in Bangladesh. Data has been collected from 30 scheduled banks operating in Bangladesh from 2013 to 2023. The data were analyzed using the statistical software STATA 14.0. Independent variables, namely digitalized branches, ATM booths, mobile banking, online banking, and agent banking, have been chosen as proxies for financial technologies. The findings reveal that fintech variables are statistically significant in affecting SME financing, indicating that fintech has made sharing information easier and boosted fundraising activities. Moreover, the endogeneity problem has been checked using the GMM method. This study might include new dimensions to the research on the impact of fintech adoption on SME financing, as it is suggested that the use of fintech bridges the financing gap between banks and SMEs. It is also advised that bankers should receive training in online banking and have solid working knowledge of these financial technologies. Besides, this study will be beneficial to governments, banks, and other concerned regulators in understanding how to implement the benefits of financial technology for the development of banking and SME sectors.