From Digital Transactions to Formal Credit: A Review of FinTech-Enabled MSME Financing in India (OpenAlex (recherche mondiale))

Summary

• The study gathers primary data using a structured questionnaire administered to a sample size of 100 respondents from MSMEs.p.6
• Hypothesis 1 testing yields a calculated Chi-Square value of 16.67, exceeding the critical value of 3.841 at a 5% level of significance.p.8
• Out of 50 respondents with high FinTech adoption, 40 report access to formal credit while 10 report no access.p.7
• Out of 50 respondents with low FinTech adoption, 20 report access to formal credit while 30 report no access.p.7
• Hypothesis 2 testing demonstrates a calculated Chi-Square value of 16.00 against a critical value of 3.841 at 1 degree of freedom.p.10

Key insights

1. Traditional credit assessment mechanisms in India restrict informal and semi-formal MSMEs due to heavy reliance on collateral and financial statements.p.1
2. Alternative data and Account Aggregator frameworks enable financial institutions to transition from collateral-dependent lending to data-driven credit evaluation.p.2
3. A multi-country study across 54 countries establishes that smaller enterprises face significantly higher financial and legal growth constraints.p.4
4. Empirical testing reveals a statistically significant positive association between high FinTech adoption and formal credit accessibility for MSMEs.p.8
5. Greater awareness and adoption of digital financial infrastructure correlate significantly with positive perceptions of sustainable MSME financing.p.10
6. Data breaches and low cybersecurity infrastructure present significant privacy risks for MSMEs sharing digital transaction records.p.12
7. Algorithmic bias in automated AI credit scoring systems can result in unfair loan rejections for historically underserved enterprise segments.p.12