Implications of Indonesia's Financial System Stability for MSME Financing through Fintech and Active Fintech Users

Sofi Meidyasari; Heru Subiyantoro; Yolanda Yolanda

doi:10.61132/santri.v4i3.2277

Authors

Sofi Meidyasari Universitas Borobudur
Heru Subiyantoro Universitas Borobudur
Yolanda Yolanda Universitas Borobudur

DOI:

https://doi.org/10.61132/santri.v4i3.2277

Keywords:

Active Fintech Users, Error Correction Model (ECM), Financial System Stability, Indonesia, MSME Financing

Abstract

The rapid growth of fintech in Indonesia has transformed MSME financing, yet its linkage to broader financial system stability remains underexplored. This study investigates the implications of Indonesia's financial system stability for MSME financing through fintech platforms and the number of active fintech users. Utilizing the Error Correction Model (ECM) technique, we employ monthly time series data comprising 72 observations from January 2019 to December 2024, drawn from Bank Indonesia, Otoritas Jasa Keuangan (OJK), and fintech industry reports. The empirical results indicate that financial system stability significantly and positively influences MSME financing via fintech in both the short and long run. Similarly, stability exerts a significant positive effect on the number of active fintech users over these periods. These findings highlight the symbiotic relationship between macroeconomic financial resilience and digital lending ecosystems, where a stable financial system fosters greater fintech adoption and MSME credit access. Impulse response functions and variance decompositions further confirm the directional causality from stability to fintech metrics. Policymakers should prioritize financial stability measures to bolster inclusive financing for MSMEs, which constitute over 99% of Indonesian businesses. This research contributes to the literature on fintech's role in emerging economies, advocating for regulatory frameworks that integrate stability with digital innovation.

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