The Cash Holdings of Fintechs and SMEs: Evidence from OECD Countries

Small and Medium Enterprises (SMEs) are considered to be an important engine of an economy. Given the impact of cash holdings on the survival of SMEs, it is important to assess the factors that enhance SMEs’ cash holdings. Adopting the Generalized Method of Moments (GMM) and using member countries of the Organisation for Economic Co-operation and Development (OECD) from 2011 to 2018, we find that fintechs increase cash holdings of SMEs. Further, we find that better institutional quality strengthens the positive relation between fintechs and cash holdings. Our results suggest that managers may utilize fintechs to enhance cash holdings. Moreover, our findings are in line with the regulators’ steps toward enhancing fintech startups.