The Impact of Digital Finance on SMEs’ Growth and Sustainable Practices

Abstract

Digital finance is increasingly used by small and medium enterprises to manage payments, banking transactions, business records, and routine financial activities. This study examines how mobile application services, internet banking services, service efficiency, and digital adoption rate are associated with SME growth and sustainable practices in the Colombo District of Sri Lanka. A quantitative cross-sectional survey was conducted among 200 registered SMEs, while 163 complete responses were used for regression analysis after data screening. The findings show that mobile application services are the strongest predictor of both SME growth and sustainable practices, followed by internet banking services and service efficiency. However, digital adoption rate is not statistically significant once these functional and efficiency-related dimensions are included. The results suggest that SME outcomes are associated more strongly with the quality, usefulness, and routine integration of digital finance than with adoption frequency alone. The study contributes to SME digital finance literature by showing that digital finance can be understood as an operational capability that supports growth and sustainability through transaction speed, record discipline, financial control, and traceability.