Augmenting Bank Credit Flow to Agro-Processing SMEs through Financial Technology (FinTech): Evidence from Tanzania

Abstract

The drivers of bank credit flow of transaction costs, credit risk management, information asymmetry, and institutional lending structure are extensively examined. Previous studies have assessed how SMEs might address their financing issues from a demand side. This study is inclined toward the supply side of financing. We aimed to determine how FinTech can counteract the effects of lending costs, information asymmetry, and credit risk management to influence the flow of bank credit to agro-processing SMEs and other entrepreneurs. A total of 399 questionnaires were collected for statistical analysis using partial least square structural equation modeling (Smart PLS). We demonstrate that FinTech as a moderator reduces the negative effects of information asymmetry and credit risk management to allow agro-processing SMEs to obtain more loans. Policymakers can use the findings of this study to improve banks' financial technology in lending activities for the sustainability of entrepreneurial activities.