Digital Finance Alleviates the Financing Problems Faced by Small and Medium-Sized Enterprises (Advances in Economics Management and Political Sciences)

Summary

• Funding is a big challenge for SMEs even though they play an important role in economic development.p.1
• The paper uses a literature review to discuss the two-way influence between digital finance and SME financing.p.1
• Digital finance aims to promote SME financing by reducing information asymmetry, expanding financing channels, lowering costs and improving risk control.p.3
• Equity crowdfunding can help SMEs raise funds and simplify the financing process.p.3
• Digital finance also brings risks for SMEs, including technical issues, data and privacy leakage and lack of regulation.p.4
• Countermeasures are proposed from three perspectives: SMEs, financial institutions and government.p.5

Key insights

1. Most existing research covers only the positive effect of digital finance on easing SME financing constraints, leaving risks poorly documented.p.2
2. Digital finance goes beyond traditional financial statements in evaluating SME credit.p.3
3. The financing technology threshold for SMEs is high and technology innovation is costly.p.4
4. SMEs should strengthen their digital investment and cultivate digital talent to improve their financing capability.p.5
5. Financial institutions should build digital finance platforms based on big data and cloud computing to evaluate SME credit accurately.p.5
6. The government needs to improve the regulatory system and provide policy support.p.5