Assessing the Moderation Effect of Financial Technology on the Development and Growth of MSMEs

Abstract

Technology has advanced and played an important role in the financial sector and it is one of the reasons financial technologies (FinTech) were born. Many micro, small and medium enterprises (MSMEs) are compelled by the expansion of the digital economy to adopt technological advancements. The main aim of this study is to assess how FinTech boosts the growth of MMSMEs.The stratified sampling method was used to select a sample size of 316 from the population for the study. Three FinTech indicators were used namely mobile/online banking, digital lending and mobile money. A partial least square model was used to ascertain the study objectives. The study concluded that FinTech had a direct significant impact on the expansion of MSMEs in Ghana. However, marketing strategy did not have a direct impact on the growth of MSMEs. Examining each FinTech indicator, it was found that mobile/online banking significantly moderates access to finances, marketing strategy and customer services for the development and growth of MSMEs. Whereas digital lending is only significantly moderate with access to finances and mobile money is significantly moderate with access to finances and marketing strategies on the development and growth of MMSMEs. Finally, the study suggested increased use of FinTech (mobile money, online banking and banking lending) as its positive effect on the factors that lead to the expansion of micro, small and medium enterprises in Ghana. In addition, marketing strategies are more effective when FinTech is involved.  This empirical study contributes to the novel understanding of how FinTech (mobile money, online banking and banking lending) impacts the development and the growth of MSMEs