Financial Technology
Author : Dipali Gajare
Improving MSME performance through financial literacy, financial technology, and financial inclusion
Ade Gunawan & Jufrizen & Delyana Rahmawany Pulungan, 2023 Presented that Micro, small, and medium enterprises (MSMEs) play a crucial role in national economies, particularly during economic crises. In Indonesia, during the 1997-1998 economic crisis, the MSME sector was the only one able to withstand the economic downturn. Following the crisis, MSMEs continued to grow, with employment rising from 65 million to 114 million workers by 2013. MSMEs contribute significantly to macroeconomic development, national income, and employment. In 2014, they contributed 5,440,007.9 billion Rupiah to Indonesia’s GDP and employed over 114 million people, highlighting their importance in labor absorption and equitable development distribution.
The influence of financial technology & literacy on MSMEs sustainability with financial inclusion as a mediating variable
Noor Endah Cahyawati & Kacahya Hanugrah Nantungga & Yunice Karina Tumewang, 2023. Presented that This study explores the influence of financial technology, financial literacy, and financial inclusion on the sustainability of Micro, Small, and Medium Enterprises (MSMEs). Financial inclusion and financial literacy are positively correlated, as demonstrated by previous research (Kusuma, 2020; Irman et al., 2021), with financial literacy helping MSME owners make informed decisions that promote business sustainability (Rahayu & Musdholifahi, 2017; Aribawa, 2016). Financial technology, which enhances the efficiency, security, and convenience of transactions, is also shown to positively affect MSME sustainability by improving business operations and sales (Nurohman et al., 2021). Furthermore, financial technology and literacy, when combined with financial inclusion—access to financial services—help MSMEs gain capital and support business growth. The study proposes that financial literacy positively impacts MSME financial inclusion, which in turn supports sustainability. The research methodology involved surveying 100 MSMEs in Sleman using non-probability sampling and questionnaires, focusing on variables like financial technology, perceived usefulness and ease of use, and financial inclusion’s role in supporting MSME growth.
On the nexus between wealth inequality, financial development and financial technology
Frost, Jon & Gambacorta, Leonardo & Gambacorta, Romina, 2022 presented that This paper examines the impact of financial development and fintech on wealth inequality by analyzing microdata from the Survey on Household Income and Wealth (SHIW) in Italy (1991-2016). The study finds that wealthier households consistently earn higher returns than poorer ones, with both financial development (measured by bank branches) and fintech (measured by remote banking) positively influencing financial wealth and returns across all wealth deciles. However, these benefits are more significant for wealthier households. For the top decile, a one-standard deviation increase in bank branches is linked to an additional €34,000 in wealth and 2.8 percentage points higher returns, while remote banking access adds €4,000 in wealth and 0.32 percentage points in returns. Although both factors positively affected financial wealth throughout the study period, the effects diminished as remote banking became more widespread and the number of bank branches declined. The paper suggests that while financial development and fintech can benefit households across the wealth spectrum, their benefits are more pronounced for wealthier individuals, potentially increasing wealth inequality.
Financial Development and Technology
Solomon Tadesse, 2005 presented that This paper investigates the relationship between financial development and economic growth, focusing on how financial development impacts productivity growth, particularly through technological innovation. The study highlights that financial systems, including banks and capital markets, facilitate technological progress by providing the necessary capital for innovation, reducing risks, and promoting specialized technologies. By analyzing data across 38 countries and 10 industries, the paper finds that well-developed financial systems lead to higher technological progress and real cost reductions, with particularly strong effects in industries that depend heavily on external finance, such as the plastics industry. The research shows that financial development is positively correlated with productivity gains, with more advanced banking sectors significantly boosting technological progress and cost reduction. The results also suggest that the benefits of financial development are not uniform across industries, as firms in finance-dependent sectors benefit more from developed financial markets. Overall, the paper contributes to understanding how financial systems promote growth through productivity, especially technological innovations.
Financial System Architecture and Technological Vulnerability
Selman Erol & Michael Junho Lee, 2024 presented that Recent research has highlighted a positive relationship between financial development and economic growth, yet the exact mechanisms through which financial systems impact real sector performance remain unclear. While financial development is known to enhance capital mobilization and investment efficiency, economic growth is largely driven by productivity growth rather than capital accumulation. This paper explores the role of financial development in promoting technological innovation and productivity. It argues that well-developed financial systems facilitate the adoption of new technologies, reduce investment risks, and enable specialized technological innovations. Using cross-country and cross-industry data, the study finds that countries with developed banking sectors and larger stock markets experience faster technological progress and real cost reductions. Financial development is particularly beneficial for industries with younger, externally dependent firms, which require external finance to innovate. The results suggest that financial development contributes to economic growth by enabling firms to access capital for innovation, although the ultimate source of technological progress remains the firm’s innovative capacity.
The Impact of Technological Capability on Financial Performance in the Semiconductor Industry
Hong Park & HyJuunseog Chung & Ki Hong Kim & Jin Ju Kim & Chulung Lee, 2021 presented that The semiconductor industry is heavily reliant on technology-driven innovation models, with emerging applications like artificial intelligence (AI), 5G, and autonomous driving pushing firms to adopt cutting-edge technologies. These innovations involve higher levels of integration, improved speed, low power consumption, and advanced software, enabling firms to achieve technological and cost advantages, which translate into better financial performance. Continuous research and development (R&D) is essential to meet customer needs and develop new products efficiently. Financial performance is typically measured through metrics such as revenue, market capitalization, and profitability, with revenue being a primary focus in this research. Financial inputs, including costs, are critical for achieving targeted financial outcomes, and firm-specific factors such as human resources and firm age also influence growth. Technological capability is a key determinant of financial success for technology-intensive firms, particularly in the semiconductor industry, where cutting-edge technologies like AI, 5G, and IoT are transforming the market. Firms’ technological strategies, such as technological intensity and diversity, are central to maintaining competitive advantages, and patents are used as a measure of a firm’s technological capability and its impact on financial performance.
Financial Technology (FinTech) as a Financial Development Factor in the EU Countries
Olga Lavrinenko & Edmunds Čižo & Svetlana Ignatjeva & Alina Danileviča & Krzysztof Krukowski, 2023. Presented that The aim of the research is to determine the impact of financial technology (FinTech) on financial development in EU countries. The multi-dimensional nature of the concepts described above and the low availability of data for regions smaller than countries makes it difficult to investigate the link between financial development and FinTech, as well as affects the values of the results due to a certain averaging of indices across countries. The study examines the Global FinTech Index and the Financial Development Index, which characterize financial development in the EU countries, as well as the sub-indices of the Financial Development Index. The article applies frequency analysis and correlation analysis methods. A positive linear relationship between the Global Fintech Index and the Financial Markets Index sub-index, as well as its components Financial Markets Depth Index and Financial Markets Efficiency Index, has been identified. There is also a positive linear relationship between the Global FinTech Index and the Financial Institutions Depth Index, while a negative linear relationship has been identified between the Global FinTech Index and the Financial Institution
The Effect of Innovation and Information Technology on Financial Resilience
Saeid Homayoun & Mohammadreza Pazhohi & Hashem Manzarzadeh Tamam, 2024. Presented that In today’s uncertain world, financial resilience—defined as an organization’s ability to withstand economic shocks and adapt to changing conditions—is crucial for long-term survival. Financial resilience enables organizations to manage unexpected cash flow events and respond effectively to risks and opportunities. Innovation and information technology play significant roles in improving financial resilience, particularly in the context of digital transformation. Emerging technologies like artificial intelligence, mobile data transmission, and financial technologies are reshaping the economy, requiring businesses to adapt their strategies and organizational structures to thrive. Organizational innovation, driven by creativity and the use of digital technologies, fosters resilience by enabling companies to respond dynamically to challenges. Research has shown that innovation, combined with technological adoption, enhances an organization’s capacity to recover from financial shocks. However, while prior studies have explored financial resilience, there is limited empirical evidence on the specific impact of innovation and information technology, particularly in developing economies like Iran. This study aims to fill this gap by investigating how innovation and information technology influence financial resilience in such contexts, using structural equation modeling to capture the complex relationships among these factors.
Digital Technologies and Financial Inclusion in Sub-Saharan Africa
Jean-Claude Kouladoum & Muhamadu Awal Kindzeka Wirajing & Tii N. Nchofoung, 2022. Presented that Digital technologies have significantly improved financial inclusion in Sub-Saharan Africa, providing access to financial services for individuals who previously lacked access due to poverty and exclusion. These technologies, including mobile money and internet banking, have reduced transaction costs and facilitated economic development, particularly in rural areas. However, there is ongoing debate about whether digitalization enhances financial system stability or makes it more vulnerable to instability. While mobile money penetration has led to a growth in financial inclusion, challenges such as high illiteracy rates, limited technological infrastructure, and low financial literacy persist, hindering the full potential of digital technologies for inclusive growth. Despite these obstacles, digital technologies have contributed to poverty alleviation, improved social well-being, and fostered economic growth in Africa. Yet, the rate of financial inclusion in Africa remains lower compared to developed countries, and the financial system remains largely exclusive for a significant portion of the population. The study aims to explore whether digital technologies can enhance financial inclusion and contribute to Africa’s economic sustainability, addressing policy implications for improving the financial sector through information and communication technologies.
Regional financial technology and shadow banking activities of non-financial firms: Evidence from China
Zhang, Qiuyue & Que, Jiangjing & Qin, Xiuting, 2023.presented that Shadow banking in China has rapidly grown, reaching over 80% of GDP in 2016, helping small and medium-sized firms access credit (Du et al., 2017). However, it can also lead to risks like reduced investment in the real economy (Seo et al., 2012; Si et al., 2021). Financial technology, through tools like big data and AI, has improved financial efficiency and reduced information asymmetry (Cho and Chen, 2021). This study examines how financial technology affects shadow banking, finding that it boosts shadow banking activities, especially for firms with lower profitability. It also reveals that financial technology encourages financial activities over real economy investment. Additionally, financial regulations can reduce the negative effects of financial technology on excessive shadow banking. This research contributes to understanding the relationship between financial technology and shadow banking in non-financial firms.
REFERENCE
Ade Gunawan & Jufrizen & Delyana Rahmawany Pulungan, 2023. ” International Journal of Applied Economics, Finance and Accounting,
Noor Endah Cahyawati & Kacahya Hanugrah Nantungga & Yunice Karina Tumewang, 2023. ” Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol.
Frost, Jon & Gambacorta, Leonardo & Gambacorta, Romina, 2022. ,” Journal of Economic Behavior & Organization, Elsevier, vol
Solomon Tadesse, 2005.” William Davidson Institute Working Papers Series wp749, William Davidson Institute at the University of Michigan.Handle: RePEc:wdi:papers:2005-749
Selman Erol & Michael Junho Lee, 2024.,” Staff Reports 1122, Federal Reserve Bank of New York.
Hong Park & HyJuunseog Chung & Ki Hong Kim & Jin Ju Kim & Chulung Lee, 20,” Sustainability, MDPI, vol. 13(2), pages 1-20, January.
Olga Lavrinenko & Edmunds Čižo & Svetlana Ignatjeva & Alina Danileviča & Krzysztof Krukowski, 2023. ,” Economies, MDPI, vol. 11(2), pages 1-20, February.
Saeid Homayoun & Mohammadreza Pazhohi & Hashem Manzarzadeh Tamam, 2024. ,” Sustainability, MDPI, vol. 16(11), pages 1-23, May.
Jean-Claude Kouladoum & Muhamadu Awal Kindzeka Wirajing & Tii N. Nchofoung, 2022. ,” Working Papers of the African Governance and Development Institute. 22/034, African Governance and Development Institute..
Zhang, Qiuyue & Que, Jiangjing & Qin, Xiuting, 2023. ,” Journal of Asian Economics, Elsevier, vol. 86(C).