Digital financial inclusion and SME performance: a structural equation modeling analysis of FinTech adoption impact in emerging markets

Small and medium-sized enterprises face persistent financing constraints in emerging markets, limiting their growth potential and economic contribution. This study examines how FinTech adoption influences SME performance across operational efficiency, financial health, and growth dimensions. Using structural equation modeling on survey data from 1,847 SMEs across 18 emerging market economies, collected between September 2023 and March 2024, we investigate three FinTech adoption dimensions: digital payments, alternative credit access, and mobile banking services. The analysis reveals that FinTech adoption is significantly and positively associated with SME performance across operational efficiency, financial performance, and growth dimensions, a pattern consistent with mechanisms such as transaction cost reduction and improved credit access. Digital infrastructure quality and regulatory environment moderate these relationships, with favorable conditions substantially amplifying FinTech benefits. The integrated theoretical framework combining resource-based view, technology acceptance model, and institutional theory provides comprehensive understanding of financial technology’s transformative role in resource-constrained environments. Findings offer actionable insights for policymakers in emerging markets, particularly the Middle East and North Africa region, highlighting the strategic importance of digital infrastructure investment and adaptive regulatory frameworks for accelerating inclusive economic growth through SME development. The research contributes to digital financial inclusion literature by documenting how the association between FinTech adoption and SME performance varies with contextual conditions, and by pointing to the mechanisms through which FinTech innovations may address longstanding barriers to SME competitiveness in developing economies.