Enhancing SME growth through fintech credit access and financial literacy in Kisii County, Kenya

Abstract

Small and medium enterprises (SMEs) remain fundamental to economic transformation by generating employment, stimulating innovation, and supporting household incomes. Despite their importance, constrained access to affordable finance continues to limit business expansion, particularly in developing economies. Recent advances in financial technology (fintech) have broadened access to credit through digital lending platforms; however, the extent to which these services translate into enterprise growth may depend on the financial capability of business owners. This study investigated the effect of fintech credit access on enterprise growth and examined whether financial literacy moderates this relationship among SMEs in Kisii County, Kenya. A correlational research design was employed using primary data collected from 464 SME owner-managers through structured questionnaires. The data were analyzed using descriptive statistics, Pearson's correlation, hierarchical multiple regression, and moderated regression analysis. The findings revealed a significant positive association between fintech credit access and enterprise growth (r = 0.229, p < 0.001). Hierarchical regression indicated that fintech credit access significantly predicted enterprise growth in the baseline model (β = 0.229, p < 0.001), while financial literacy contributed additional explanatory power (β = 0.117, p = 0.037). Incorporating the interaction term significantly improved model performance ( Δ𝑅2 = 0.042 , p < 0.001), confirming a moderation effect. The interaction analysis further demonstrated that financial literacy strengthened the positive influence of fintech credit access on enterprise growth (b = 0.108, p < 0.001). Conditional effects analysis showed that fintech credit access did not significantly influence enterprise growth among SMEs with low or average financial literacy but produced a significant positive effect among enterprises managed by highly financially literate owners (b = 0.182, p < 0.001). The findings indicate that financial literacy enhances entrepreneurs' ability to convert digital credit into meaningful business growth. Expanding fintech credit alone may therefore be insufficient unless accompanied by initiatives that strengthen financial knowledge and decision-making capabilities. The study recommends integrating financial literacy programmes into fintech financing initiatives to improve the productive utilization of digital credit and promote sustainable SME growth. Future studies should examine additional contextual and institutional factors that may shape the relationship between fintech credit access and enterprise performance in emerging economies.