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Coping with the storm: The role of fintech in SME survival

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  • Zhou, Nan
  • Sun, Ruohan

Abstract

COVID-19 decimated the global real economy, to what extent did the epidemic jeopardize the survival of small and medium enterprises (SMEs)? This study examines 13,026,723 SMEs in China to assess their resilience under the application of fintech in the banking sector. Our findings suggest that the epidemic reduced the probability of SME survival and increased the negative impacts of excessive distance between banks and enterprises and a banking structure dominated by large banks on SME survival. Fortunately, fintech strengthens SMEs’ resistance to risk shocks. Specifically, when banks and enterprises are farther apart and the banking structure is dominated by large banks, the positive impact of fintech on the resilience of SMEs to risk shocks becomes more evident. This suggests that fintech reduces the impact of geographical distance on the interaction between banks and enterprises and inverts the traditional notion that large banks are unsuited to serving SMEs.

Suggested Citation

  • Zhou, Nan & Sun, Ruohan, 2024. "Coping with the storm: The role of fintech in SME survival," International Review of Financial Analysis, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924000899
    DOI: 10.1016/j.irfa.2024.103157
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    More about this item

    Keywords

    Fintech; Bank applications; SME survival; Bank-enterprise distance; Bank type; COVID-19;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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