Financial Technology and Financial Literacy: The Key to Post-COVID Success for E7 Agro-SMEs.

Abstract

Purpose- This study analyzes how financial literacy mediates the impact of fintech adoption on the performance of SMEs especially in operational and financial aspects among seven emerging economies during the COVID-19 pandemic recovery.

Study Design/Methodology/Approach - This study employed a quantitative research design, utilizing a cross-sectional survey methodology. The study analyzed the data gathered from 407 SEMs in seven emerging economies and examined their performance in two aspects. PLS-SEM was used to analyze data, and to evaluate reliability, two measures were employed: construct reliability (rho_A) and composite reliability (CR) whereas validity was examined through discriminant validity and construct validity.

Findings- The findings reveal a significant and positive relationship between financial technology (fintech) and financial literacy. Furthermore, fintech was found to have a positive and significant effect on SMEs' performance. Financial literacy also significantly mediates the relationship between fintech services and SME performance.

Practical Implications- To fully leverage the potential of fintech, policymakers and business support organizations in E7 countries should prioritize financial literacy programs for SMEs. By equipping SMEs with the knowledge to effectively utilize fintech tools, these programs can help enhance business performance. Additionally, fintech platforms should incorporate educational resources to guide SMEs in making informed financial decisions.

Originality/Novelty - This study's novelty is its exploration of financial literacy as a mediator between fintech adoption and SME performance in the COVID-19 recovery phase across E7 economies. The study aims to uncover gaps in existing research by highlighting emerging trends and ultimately contribute to a deeper comprehension of how these elements intersect and influence each other.