Is Digital Transformation Tightening SMEs' Access to Debt?

Abstract

Is the constantly increasing technology always a blessing, or does it worsen existing challenges? This thesis analyzes how digital transformation in the financial sector affects Small and Medium Enterprises (SMEs) debt. Using the Payment Service Directive No. 2 (PSD2) as a shock into digital transformation, we employ a difference-in-differences (DiD) methodology to analyze the changes in SMEs' debt ratios triggered by digital transformation. First, our study investigates how SMEs are affected by digital transformation in the financial sector. Second, we test whether SMEs experience varying impacts depending on their characteristics. With this approach, we aim to understand the reasons behind the effect of digital transformation on SMEs' debt in the financial sector.