The Impact of Digital Finance on The Financial Constraints of Small and Medium-sized Enterprises

Abstract

As an important pillar of the national economy, small and medium-sized enterprises play a key role in economic growth, job creation, and innovation. However, due to factors such as small size, insufficient credit, and high financing costs, their development has long been constrained by difficulties and high costs in obtaining financing. The rapid development of digital finance has provided small and medium-sized enterprises with new ways to ease financial constraints through technologies such as big data, artificial intelligence and blockchain. By analyzing relevant literature in recent years, this paper explores the evolution and applicability of the financial constraint index, analyzes the influencing factors and manifestations of financial constraints of small and medium-sized enterprises, and reveals the mechanism by which digital finance acts on financial constraints. The study found that digital finance has broadened financing channels through channels such as crowdfunding, peer-to-peer lending and supply chain finance, and reduced financing costs by using data-driven credit assessments; however, digital transformation has also brought pressure for technological updates and intensified market competition, which may increase the financial burden of some companies. The marginal contribution of this article lies in integrating multidisciplinary perspectives, comprehensively revealing the dual effects of digital finance, and proposing future research directions, such as the moderating role of digital literacy on financing effects. The research provides theoretical support and practical guidance for small and medium-sized enterprises to optimize their financial strategies in the digital economy era, aiming to help them achieve sustainable development and enhance their resilience.