Impact of Digital Lending Platforms on SME Financing: A FinTech-Enabled Access-to-Finance Perspective on MSME Business Growth and Profitability

Author

Myla Mahalakshmi, Dr. I. Mohan Krishna

Abstract

 Micro, Small and Medium Enterprises (MSMEs) play a vital role in the economic development of emerging economies such as India. However, they continue to face significant financing challenges due to limited collateral, informal financial records, and insufficient credit histories. Financial Technology (FinTech) and digital lending platforms offer potential solutions by improving credit assessment, accelerating loan disbursement, and reducing transaction costs. This study examines the relationship between FinTech adoption, digital lending, and MSME performance, focusing on business growth and profitability, with access to finance serving as a mediating factor. The study proposes an integrated framework to understand how digital financial solutions influence MSME development and financial sustainability.

Data are collected through a structured Likert-scale questionnaire administered to employees and managers of MSMEs. The collected data are analysed using Microsoft Excel and statistical techniques, including chi-square tests, analysis of variance, multiple regression, and mediation analysis. The illustrative analysis based on simulated data indicates that FinTech adoption and digital lending positively influence MSME performance and improve access to finance. The findings also suggest that access to finance partially mediates the relationship between digital financial solutions and MSME performance. The study highlights the importance of digital financial services in addressing financing barriers and supporting business development. The proposed framework can help policymakers, financial institutions, and FinTech providers develop effective strategies to improve credit accessibility, enhance profitability, and promote the long-term sustainability of MSMEs.

Keywords

FinTech Adoption; Digital Lending; Access to Finance; MSME Performance; Business Growth; Profitability; Mediation Analysis

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References

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