Impact of FinTech Lending Platforms on the Growth of Small and Medium Enterprises (SMEs) in Pakistan: A Secondary Data Analysis

Abstract

Small and Medium Enterprises (SMEs) in Pakistan are important contributors to the country's economic growth, as they generate employment, drive industrial production, and increase GDP. Regardless of their significance, SMEs in Pakistan have historically faced an acute lack of financing due to excessive collateral requirements, high transaction costs, and limited service from conventional banks. Financial Technology (FinTech) lending platforms have become an alternative source of finance and, in recent years, present digital, data-driven, and comparatively accessible credit solutions to underserved SME segments. This paper analyses how FinTech lending platforms can be used to support the development of Small and Medium Enterprises (SMEs) in Pakistan through secondary data analysis. Using the reports based on the State Bank of Pakistan, Pakistan Bureau of Statistics, World Bank, and Pakistan FinTech Network, the study applies Thematic Analysis and Trend-Based Analysis to assess the trends in 2015-2024. Thematic analysis of a survey of policy documents, industry reports, and empirical studies demonstrates that there are four major themes: (1) increased access to finance of underserved SMEs, (2) faster and cost-effective credit disbursement, (3) stabilized liquidity in times of economic shocks, and (4) regulatory and digital illiteracy barriers.

The analysis based on trends shows that the volume of digital lending, SME loans disbursement,

and the increasing digital account penetration are steadily increasing following the regulatory changes, as well as the launching of digital frameworks in banking. The results suggest that FinTech lending systems have a positive impact on SME revenues, employment persistence, and working capital management, especially since 2019. However, the moderating effect of total growth is influenced by structural barriers such as regulatory uncertainty and low financial literacy. The paper offers policy recommendations to strengthen the digital credit ecosystem and improve the sustainability of SME growth in Pakistan.