Digital Finance for MSMEs: Issues, Challenges, and Keys to Promote Inclusive Growth

This chapter discusses the dynamics of digital financial services development and penetration particularly for MSMEs. It elaborates on its key issues, challenges, and how it accelerates inclusive growth. In doing so, it mainly utilizes national-scale survey data that has been conducted by the team toward MSMEs across sectors. It is found that digital financial services have become alternative sources of financial services needs for MSMEs, especially for those who cannot access mainstream services such as banks. In terms of service type, digital payment is the most widely used among them followed by lending services. The chapter also provides lessons learned from other countries that have been successfully developing digital financial services for MSMEs. Finally, it proposes several recommendations based on the findings.