Impact of Digital Transactions on Financial Traceability and Credit Access for SMEs in Sri Lanka

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2024

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Abstract

This study explores the transformative impact of digital payment systems on financial traceability and its implications for small and medium-sized enterprises (SMEs) regarding access to credit within formal financial channels. Through a thorough examination of existing gaps in theoretical, empirical, and practical knowledge, the research formulates a focused problem statement. While centering on its primary objective, the study also integrates additional factors to expand its analytical scope. The use of Digital Payment Systems (UDPS) and Financial Data Traceability (FDT) are positioned as mediating variables, while Government Intervention (GI) serves as a moderating factor, as supported by an extensive review of the literature. A carefully constructed theoretical framework underpins the study, aligning all core components. Grounded in a positivist epistemology and following a deductive approach, the study employs quantitative methods for primary data collection, supplemented by interviews to enhance validation. This mixed-methods strategy strengthens the validation process, beginning with a pre-survey for content validation and followed by a pilot survey involving 30 respondents to ensure measurement reliability and validity. Given the study's broad population base and the absence of a defined sample framework, a multilevel mixed-method sampling technique was employed, gathering responses from 600 SME digital payment users across all 25 districts of Sri Lanka, out of a larger population of 85,453 as of 2022. The data was analyzed using the Partial Least Squares Structural Equation Modelling (PLS-SEM) technique, which revealed that UDPS has the most significant effect on SME credit access, followed by GI and FDT. The findings provide new insights into the complex relationship between digital payment systems, financial traceability, government intervention, and SME credit access, contributing to a deeper understanding of these dynamics and their implications for business growth.

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Small and Medium Size enterprises (SME), Usage of digital payment Systems (UDPS), Traceability of Financials (TFD), Government Interventions (GI)

Citation

Premathilaka, S. C. (2024). Impact of Digital Transactions on Financial Traceability and Credit Access for SMEs in Sri Lanka. Doctor of Business Administration Thesis, Faculty of Graduate Studies, University of Kelaniya, Sri Lanka.

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