Financial technology and performance of small and medium enterprises: evidence from Dar es Salaam City, Tanzania

Abstract

The purpose of the study was to analyse the effects of financial technology (Fintech) on the performance of Small and Medium Enterprises (SMEs). An explanatory research design was conducted in Dar es Salaam City, Tanzania. The study population was 2,867 SMEs located in two administrative districts of Dar es Salaam City namely, Temeke and Kinondoni Municipalities. The quantitative study used a sample size of 300 randomly selected SMEs. Descriptive statistics and linear multiple regressions were used to analyze the collected data. The descriptive findings show that the adoption and use of digital banking, mobile money services, and peer-to-peer lending is extremely high compared with crowdfunding. However, SMEs owners/managers were not sure about the adoption and use of crowd investing. In the case of regression model, the findings indicate that four predictors; digital banking, crowdfunding, peer-to-peer lending and mobile money services have a positive and statistically significant impact on SMEs performance. Based on the findings the study concludes that Fintechs are beneficial to SMEs performance. Therefore, the study recommends that SMEs should enhance the use of these Fintech platforms for the effective funding of their business.