Blockchain for SME Finance: Call for Empirical Testing

Abstract

For many countries worldwide, small and medium enterprises (SMEs) are the backbones of their economy, more than half of the overall world population is working for SMEs. Historically, research studies on SME lending have emphasised that SMEs are less transparent and have an information advantage in comparison to external lenders as many businesses are owner-managed and privately owned. Distributed Ledger Technology (DLT), also known as a blockchain, opens new opportunities to SMEs. It could be used as a network system to exchange financial and non-financial data for assessing SMEs' creditworthiness. Hence, blockchain could bridge the information/data gap between lenders and SMEs and enhance the overall financing speed. This article provides a theoretical overview of the policy developments for blockchain and DLTs with the final recommendations for empirical testing.