DIGITAL FINANCIAL INCLUSION AND SME GROWTH: THE MEDIATING ROLE OF FINTECH ADOPTION IN PAKISTAN

Abstract

The rapid expansion of digital financial services has transformed the operational environment of Small and Medium Enterprises (SMEs), particularly in emerging economies such as Pakistan. This study examined the effect of digital financial inclusion on SME growth while investigating the mediating role of fintech adoption. The research aimed to evaluate how access to digital financial services influences business performance and how fintech integration strengthens this relationship. A quantitative research approach was employed using a structured questionnaire distributed among SME owners and managers operating in major business sectors of Pakistan. Data were collected from 385 respondents through a simple random sampling technique and analyzed using SPSS and Structural Equation Modeling (SEM). The findings revealed that digital financial inclusion had a significant positive effect on SME growth and fintech adoption. Furthermore, fintech adoption significantly enhanced SME performance and partially mediated the relationship between digital financial inclusion and SME growth. The results indicated that SMEs utilizing fintech technologies experienced improved financial management, operational efficiency, and market competitiveness. The study concluded that digital financial inclusion and fintech adoption are critical drivers of sustainable SME development in Pakistan. The findings provide valuable implications for policymakers, financial institutions, fintech providers, and SME managers in promoting digital transformation and inclusive economic growth.