Impact of Digital Financial Services on Entrepreneurial Growth
Keywords:
Keywords: Digital Financial Services, Entrepreneurship, Financial Inclusion, FinTech, Entrepreneurial Growth, Digital Payments, MSMEs, Innovation, Business Performance, Digital EconomyAbstract
In the contemporary world, Digital Financial Services (DFS) have become an important driving force in the development of modern economies impacting entrepreneurship and business activity. The incorporation of digital technology in financial systems has made it possible to provide greater access to financial services through mobile banking, internet banking, digital payments, P2P lending, crowdfunding, and fintech financial services. These innovations have helped in reducing costs associated with transactions, improving financial inclusiveness, increasing access to credit facilities, and ensuring effective management of businesses especially MSMEs. Digital financial service platforms are increasingly being used by entrepreneurs in the management of business activities, seeking funding, interacting with customers, and improving business operations. However, despite the importance of digital financial services in entrepreneurship and business activity, empirical knowledge about the role played by them is scattered.
This current study will look at the effect of digital financial services on entrepreneurship development using an analysis of existing literature in order to provide a conceptual model connecting digital financial services, financial inclusion, business effectiveness, innovation capabilities, and entrepreneurial performance. In the process, the research study provides an understanding of the ways through which digital finance plays a role in promoting entrepreneurial development, as well as the important challenges facing the adoption of digital technology. From the findings of the study, it becomes apparent that the digital financial services play a great role in promoting entrepreneurship development through the enhancement of access to finance, removal of barriers, increased business scalability, and innovation. Financial inclusion also emerges as an important mediator in the link between digital financial services and entrepreneurship development.
Downloads
References
Acs, Z. J., Estrin, S., Mickiewicz, T., & Szerb, L. (2018). Entrepreneurship, institutional economics, and economic growth. Small Business Economics, 51(2), 501–514. https://doi.org/10.1007/s11187-018-0013-9
Aker, J. C., & Wilson, K. (2013). Can mobile money be used to promote savings? Evidence from Northern Ghana. World Development, 44, 80–92. https://doi.org/10.1016/j.worlddev.2012.05.009
Arner, D. W., Barberis, J., & Buckley, R. P. (2020). FinTech and RegTech: Impact on regulators and banks. Journal of Banking Regulation, 21(4), 215–228. https://doi.org/10.1057/s41261-020-00122-2
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Beck, T., & Demirgüç-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30(11), 2931–2943. https://doi.org/10.1016/j.jbankfin.2006.05.009
Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth. Journal of Finance, 60(1), 137–177. https://doi.org/10.1111/j.1540-6261.2005.00727.x
Berger, A. N., & Udell, G. F. (2006). A more complete conceptual framework for SME finance. Journal of Banking & Finance, 30(11), 2945–2966. https://doi.org/10.1016/j.jbankfin.2006.05.008
Claessens, S., Frost, J., Turner, G., & Zhu, F. (2018). Fintech credit markets around the world. BIS Quarterly Review, 29–49.
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008
Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2022). The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. World Bank. https://doi.org/10.1596/978-1-4648-1897-4
Demirgüç-Kunt, A., Klapper, L., Singer, D., & Van Oudheusden, P. (2018). The Global Findex Database 2017. World Bank. https://doi.org/10.1596/978-1-4648-1259-0
Frost, J., Gambacorta, L., Huang, Y., Shin, H. S., & Zbinden, P. (2019). BigTech and the changing structure of financial intermediation. Economic Policy, 34(100), 761–799. https://doi.org/10.1093/epolic/eiaa003
Fu, J., & Mishra, M. (2022). Fintech in the time of COVID-19. Journal of Financial Intermediation, 50, 100945. https://doi.org/10.1016/j.jfi.2021.100945
Ghosh, S. (2022). Financial inclusion, fintech, and economic development. Journal of Asian Economics, 80, 101484. https://doi.org/10.1016/j.asieco.2022.101484
Gomber, P., Koch, J., & Siering, M. (2018). Digital finance and fintech. Journal of Business Economics, 87(5), 537–580. https://doi.org/10.1007/s11573-017-0852-x
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (3rd ed.). Sage Publications.
Hasan, R., De Renzis, T., & Schmiedel, H. (2020). Retail payments and economic growth. Bank of Finland Research Discussion Papers. https://doi.org/10.2139/ssrn.3551004
Jagtiani, J., & Lemieux, C. (2019). The roles of alternative data and machine learning in fintech lending. Financial Management, 48(4), 1009–1029. https://doi.org/10.1111/fima.12295
Kou, G., Akdeniz, O. O., Dinçer, H., & Yüksel, S. (2021). Fintech innovations and challenges. Technological Forecasting and Social Change, 166, 120611. https://doi.org/10.1016/j.techfore.2021.120611
Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003
Nambisan, S. (2017). Digital entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055. https://doi.org/10.1111/etap.12244
Oliveira, T., Thomas, M., Baptista, G., & Campos, F. (2016). Mobile payment adoption. Computers in Human Behavior, 61, 404–414. https://doi.org/10.1016/j.chb.2016.03.030
Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340. https://doi.org/10.1016/j.bir.2017.12.003
Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for mediation analysis. Behavior Research Methods, 40(3), 879–891. https://doi.org/10.3758/BRM.40.3.879
Puschmann, T. (2017). Fintech and digital transformation. Business & Information Systems Engineering, 59(1), 69–76. https://doi.org/10.1007/s12599-017-0464-6
Rogers, E. M. (2003). Diffusion of Innovations (5th ed.). Free Press.
Schumpeter, J. A. (1934). The Theory of Economic Development. Harvard University Press.
Suri, T., & Jack, W. (2016). The long-run poverty and gender impacts of mobile money. Science, 354(6317), 1288–1292. https://doi.org/10.1126/science.aah5309
Venkatesh, V., & Davis, F. D. (2000). A theoretical extension of TAM. Management Science, 46(2), 186–204. https://doi.org/10.1287/mnsc.46.2.186.11926
Xie, W., Zou, C., & Liu, Y. (2018). Digital finance and entrepreneurial development. China Economic Review, 51, 221–234. https://doi.org/10.1016/j.chieco.2018.06.003
Zhang, X., Yang, J., & Wang, S. (2019). Digital finance and innovation performance. Technological Forecasting and Social Change, 146, 512–521. https://doi.org/10.1016/j.techfore.2019.05.021
