MSME Access to Finance: The Role of Digital Payments

United Nations, Economic and Social Commission for Asia and the Pacific, MSME Financing Series No.7 (June 2022)

University of Hong Kong Faculty of Law Research Paper No. 2022/38

51 Pages Posted: 24 Jun 2022 Last revised: 27 Jul 2022

See all articles by Douglas W. Arner

Douglas W. Arner

The University of Hong Kong; The University of Hong Kong - Faculty of Law

Sijuade Animashaun

The University of Hong Kong

Kuzi Charamba

University of Hong Kong

Yixiao Cai

University of Münster; Frankfurt School of Finance & Management

Date Written: June 1, 2022

Abstract

Technology has demonstrated its potential to transform money, payments, and finance within a growing social digital transformation. While key stakeholders focus on building public infrastructure to enable faster transition towards digital economies, it is important to look inward and leverage the available developmental options that may benefit the actualisation of sustainable development goals with minimal adverse financial and economic implications. MSMEs provide the necessary pedestal to reach a larger population of unbanked and underserved segments necessary for broader financial inclusion and inclusive economic development. If this is acknowledged, ensuring their sustainability through the provision of adequate support and finance must be at the core of present policy considerations to benefit this critical group and the extended population they provide for. Ultimately, the COVID-19 implications have paradoxically presented an important opportunity for policy makers and key stakeholders to harness the existing factors surrounding individual economies in recalibrating their present and long-term recovery efforts to ensure a more resilient and inclusive economy that caters to not just the privileged, but also the neglected.

Around the globe, there is an increasing focus on ways to exploit the potential of emerging digital financial technologies, including digital payments, to accelerate MSME access to finance and achieve the United Nations Sustainable Development Goals (SDGs). Yet, achieving these envisaged benefits will require thoughtful consideration and management of various systemic risks and impacts across jurisdictions and governance levels.

In this report, we examine how digitalisation, particularly digital payments innovations and innovative payment initiatives, such as central bank digital currencies (CBDCs), can play a pivotal role in fostering micro, small and medium enterprise (MSME) access to finance.

Keywords: FinTech, BigTech, RegTech, CBDCs, Financial Inclusion, MSMEs, SDGs, Digital Currencies, Open banking, Gender-equality, Blockchain, Digital Identity, Smart Contracts, Distributed Ledgers, Payment Services, Robo Adviser, Mobile Money, TechFin, Aadhaar, eIDAS, KYC, Cyberrisk, BigData, Data Protection

JEL Classification: O00, O16, O32, O33, O38, K10, K20, K22, K33

Suggested Citation

Arner, Douglas W. and Animashaun, Sijuade and Charamba, Kuzi and Cai, Yixiao, MSME Access to Finance: The Role of Digital Payments (June 1, 2022). United Nations, Economic and Social Commission for Asia and the Pacific, MSME Financing Series No.7 (June 2022), University of Hong Kong Faculty of Law Research Paper No. 2022/38, Available at SSRN: https://ssrn.com/abstract=4138785

Douglas W. Arner (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Kuzi Charamba

University of Hong Kong ( email )

Faculty of Law, Pokfulam Road
Pokfulam
Hong Kong
Hong Kong

Yixiao Cai

University of Münster ( email )

Schlossplatz 2
Muenster, D-48149
Germany

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

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