THE ROLE OF FINTECH IN ENHANCING TRADE FINANCE FOR SMALL AND MEDIUM-SIZED ENTERPRISES IN NIGERIA: A SYSTEM GMM ANALYSIS

Abstract

This study examined the role of financial technology (FinTech) in enhancing trade finance access for Small and Medium-Sized Enterprises (SMEs) in Nigeria over the period 2000 and 2025. This analysis employed a system Generalized Method of Moments (GMM) estimation framework on panel data from 500 selected SMEs across Nigeria’s six geo-political zones. The empirical findings revealed that FinTech adoption had a positive and statistically significant relationship with SME access to trade finance, suggesting that digital financial services facilitated improved working capital management and cross-border trade participation. Mobile money penetration, digital payment adoption, and alternate credit assessment mechanisms were significantly associated with enhanced trade finance accessibility for SMEs. Furthermore, the interaction between FinTech adoption and financial literacy demonstrated a complementary effect on trade finance outcome, indicating that digital financial inclusion and capability building reinforces each other. The persistence of trade finance constraint reflected in the continued reliance on informal financing despite digitalization effort, highlighted the imperative of sustained institutional commitment to FinTech ecosystem development. These finding carried important policy implications for Nigeria’s trade modernization agenda, emphasizing the need for integrated digital infrastructure regulatory reform, and stakeholders coordination to realize the full benefits of Fintech-enabled trade finance for SMEs.