Fintech Adoption and Startup Financing in Nigeria: Evidence from Entrepreneurial Finance.

This paper aims to explore how the adoption of fintech and the financing of startups affect small and medium enterprises (SMEs) in Nigeria between 2009 and 2024. The analysis is done using Dynamic Ordinary Least Squares (DOLS) and Fully Modified Least Squares (FMOLS), which examine the long-run association between digital financial services and SME credit access. The results indicate that the impact of mobile payments (MPAY) on SME financing is strong and positive, which indicates that the use of digital payment systems enhances the management of money among SMEs and facilitate their financial operations in general. Conversely, web transfers (WAP) are negatively related to SME credit, suggesting that the use of digital transactions can lower the use of traditional borrowing. The impact of inflation (INF) on SME financing is also negative, that is, an increase in prices leads to the increased difficulty in getting credit by SMEs. Interest rates (INT), on the other hand, are not significantly affected in the long-run in the model. The FMOLS findings are generally consistent with these results but with weaker effects with mobile payments, indicating that even though FinTech is positively associated with financial efficiency, its direct influence on formal credit access is not quite significant when other statistical controls are taken into consideration. In general, it can be concluded that FinTech in Nigeria is transforming the way SMEs manage their finances more than it is widening their access to formal credit. It underscores the necessity to simplify fintech platforms and make them more accessible. Additionally, there should be greater regulatory support by governments and other concerned bodies to instill confidence in digital financial services.

Fintech adoption, Startup financing

1. Abah, M. A., Osayemwenre, U. J., Oladosu, M. A., Agida, O. D., Appiah, E., Olayode, M. T., & Glory, A. I. (2025). Fintech and Digital Payments in Entrepreneurial Finance: Impact and Future Directions. Social Science Reports.9(1), 33-39 [Google Scholar] [Crossref]

2. Africa, D. (2022). The African tech startups funding report. [Google Scholar] [Crossref]

3. Agusto Research (2025). 2025 FinTech Industry Report. https://www.agustoresearch.com/report/2025-fintech-industry-report. [Google Scholar] [Crossref]

4. Ahmad, S. (2025). Fintech and financial intermediation efficiency in Sub-Saharan Africa. International Journal of Advanced Multidisciplinary Economic Research, 3(1), 45–62. [Google Scholar] [Crossref]

5. Ahmad, S. M. (2025). Fintech adoption and financial inclusion: evidence from Sub-Saharan Africa. International Journal of Accounting, Management and Economic Review, 1(3), 240-256. [Google Scholar] [Crossref]

6. Aina, A. T. (2025). Fintech and SME Financing in Nigeria: A Qualitative Exploration Into The Challenges and Potential of Fintech in Addressing the Financing Gaps Faced by Small and Medium-Sized Enterprises (SMEs) in Nigeria. Available at SSRN 5250906. [Google Scholar] [Crossref]

7. Akande, J. O. (2025). Exploring the role of financial technology in transforming small and medium enterprises in Nigeria. Wukari International Studies Journal, 9(4), 1-16. [Google Scholar] [Crossref]

8. Anama, A. H., & Evbayiro Osagie, E. I. (2024). FinTech and financial inclusion in Nigeria: Evidence from digital financial services. Journal of Financial Innovation and Development, 6(2), 45–62. (Note: Direct DOI pending publication) [Google Scholar] [Crossref]

9. Arner, D. W., Barberis, J., & Buckley, R. P. (2016). The evolution of FinTech: A new post-crisis paradigm. Georgetown Journal of International Law, 47, 1271–1319. [Google Scholar] [Crossref]

10. Bamanga, F. M., Joshua, S. S., Abubakar, G. T., & Usman, S. G. (2025). Impact of FinTech adoption on financial inclusion in Nigeria. International Journal of Business and Management Review, 13(7), 67–77. [Google Scholar] [Crossref]

11. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108 [Google Scholar] [Crossref]

12. Beck, T., & Demirgüç-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30(11), 2931–2943. https://doi.org/10.1016/j.jbankfin.2006.05.009 [Google Scholar] [Crossref]

13. Central Bank of Nigeria (2023). FinTech strategy and regulatory framework. Abuja: CBN. [Google Scholar] [Crossref]

14. Central Bank of Nigeria (CBN) (2025). FinTech sector report. [Google Scholar] [Crossref]

15. Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008 [Google Scholar] [Crossref]

16. Deakins, D., & Freels, R. (2020). Financing small businesses: Challenges and opportunities. Small Business Economics, 54(4), 1135–1153. [Google Scholar] [Crossref]

17. Demirguc-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring financial inclusion and the fintech revolution. World Bank Publications. [Google Scholar] [Crossref]

18. Ekene, O. E. (2025). Fintech disruptions and financial inclusion in emerging economies: Evidence from Nigeria. World Journal of Advanced Research and Reviews. https://wjarr.com/content/fintech-disruptions-and-financial-inclusion-emerging-economies-evidence-nigeria [Google Scholar] [Crossref]

19. European Investment Bank (Ed.). (2021). EIB Finance in Africa Report. [Google Scholar] [Crossref]

20. Ezeocha, C. M. (2024). Financial Technology as a Tool for Promoting Financial Inclusion in Nigeria: A Theoretical Review. African Journal of Management and Business Research, 15(1), 166-181. https://doi.org/10.62154/qqr2sy50 [Google Scholar] [Crossref]

21. Financial Stability Board. (2017). Financial stability implications from FinTech. [Google Scholar] [Crossref]

22. Fintech News Africa. (2025). Nigeria’s fintech sector surges 70% despite challenges. https://fintechnews.africa/44869/fintech-nigeria/nigerias [Google Scholar] [Crossref]

23. Gompers, P., & Lerner, J. (2020). The venture capital cycle (2nd ed.). MIT Press. [Google Scholar] [Crossref]

24. Iroakazi, E. C., & Ade, B. S. (2025). The impact of fintech on financial inclusion in Southern Nigeria. International Journal of Research and Innovation in Social Science, IX, 256-273. [Google Scholar] [Crossref]

25. KPMG (2022). Pulse of Fintech. [Google Scholar] [Crossref]

26. Lee, I., & Shin, Y. J. (2018). FinTech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. [Google Scholar] [Crossref]

27. Lerner, J., Leamon, A., & Hughes, S. (2021). Information asymmetry and venture capital financing: Evidence from the early-stage market. Journal of Financial Economics, 141(3), 831–853. [Google Scholar] [Crossref]

28. Madegowda, J. (2026). Traditional vs. contemporary financing models for MSMEs and startups: A comparative study. In Empowering Inclusive Innovation (pp. 205-220). Routledge. [Google Scholar] [Crossref]

29. McKinsey & Company (2020). Harnessing Nigeria’s FinTech Potential. [Google Scholar] [Crossref]

30. NIBSS (2026). Instant Payments Report. https://nibss-plc.com.ng/instant-payment-transactions-rise-by-120-in-2yrs-cbn/? [Google Scholar] [Crossref]

31. Okoh, J. I., Stephen, O., Afrogha, O. O., & Adamu, M. A. (2025). Challenges of Financial Technology (FINTECH) Innovations of Small Enterprises in South-West, Nigeria. NIU Journal of Social Sciences, 11(1), 207-216. [Google Scholar] [Crossref]

32. Olagoke, K. C., Ajimati, A., Jubril, T. S., & Bamidele, O. M. (2025). The Adoption of Fintech Solutions by Small and Medium Enterprises (SMEs) in Ilorin. ESUT Journal of Social Sciences, 10(2). [Google Scholar] [Crossref]

33. Omoniyi, O. E., Ndace, S., Kolo, R. F., & Adeniyi, C. B. (2025). Effect of technology adoption on market innovation in Nigerian fintech industry. International Journal of Intellectual Discourse, 8(2), 287-299. [Google Scholar] [Crossref]

34. Otuya, S., Alonge, A. D., & Oluwafemi, P. O. (2024). FinTech and financial inclusion in Nigeria: The mediating role of digital financial literacy. International Journal of Economics and Financial Management, 9(7), 154-167. [Google Scholar] [Crossref]

35. Otuya, S., Uche, C., & Ibrahim, A. (2024). Digital financial literacy and financial inclusion in Nigeria: The mediating role of FinTech adoption. African Journal of Economic and Management Studies, 15(1), 112–128. https://doi.org/10.1108/AJEMS-2024-0123 [Google Scholar] [Crossref]

36. Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340. https://doi.org/10.1016/j.bir.2017.12.003 [Google Scholar] [Crossref]

37. Ozili, P. K. (2021, October). Financial inclusion research around the world: A review. In Forum for social economics (Vol. 50, No. 4, pp. 457-479). Routledge. [Google Scholar] [Crossref]

38. Pukelsheim, A., & Schmidt, T. (2022). The role of FinTech in startup financing: Trends and challenges in emerging markets. Journal of Emerging Market Finance, 21(1), 15–36. [Google Scholar] [Crossref]

39. Rivandi, E. (2026). FinTech and the level of its adoption in different countries around the world. Management Science Advances, 3(1), 45-61. [Google Scholar] [Crossref]

40. Rogers, E. M. (2003). Diffusion of innovations (5th ed.). Free Press. [Google Scholar] [Crossref]

41. Sam Abugu, C., Luo, X., & Wong, B. (2025). The combined role of FinTech innovation and financial literacy in sustainable financial inclusion in Nigeria. International Review of Economics, 72, 14. (Springer) [Google Scholar] [Crossref]

42. Sam-Abugu, K., Ibe, A., & Chukwuma, C. (2025). Financial literacy, FinTech adoption, and financial inclusion in Nigeria. Journal of Economic Development, 50(1), 45–62. [Google Scholar] [Crossref]

43. Scott, W. R. (2004). Institutional theory: Contributing to a theoretical research program. In K. G. Smith & M. A. Hitt (Eds.), Great minds in management: The process of theory development (pp. 460–484). Oxford University Press. [Google Scholar] [Crossref]

44. Tech In Africa. (2024). Nigeria’s Fintech Sector: 35% of Total Tech Investment in 2024. https://techinafrica.com/nigeria-fintech [Google Scholar] [Crossref]

45. World Bank (2021). World Development Report. [Google Scholar] [Crossref]

• Algorithms or Instincts? Understanding Bias in Digital Investment Platforms
• The Moderating Role of Fintech on the Relationship Between Financial Inclusion and SME Growth in North-Central States of Nigeria
• User Perceptions and Adoption of Fintech Wealth Management Platforms: A Descriptive Analysis