Nigerian Journal of Banking and Financial Issues (NJBFI)

SMALL FIRMS, BIG BARRIERS: THE POLITICS AND PRACTICE OF TRADE FINANCE ACCESS IN FRAGMENTED ECONOMIES

Abstract

Small and medium-sized firms (SMEs) constitute the foundation of global commerce, representing over 90% of businesses and up to 60% of employment in low- and middle-income economies. This article examines the structural, institutional, and political obstacles that sustain this exclusion, especially within the framework of disjointed regulatory landscapes, substantial compliance burdens, and inequitable financial systems. The study is based on the Political-Transactional Finance Access Model (PTFAM) and incorporates an interdisciplinary combination of Institutional Voids Theory, Financial Intermediation Theory, and the Resource-Based View of the firm. Employing a mixed-methods research methodology, we conducted a survey of 483 SMEs across six nations like Nigeria, Kenya, India, Vietnam, Colombia, and Poland, augmented by 27 comprehensive interviews with banking authorities, fintech CEOs, and trade ministry representatives. Structural Equation Modelling (SEM-PLS) indicated that institutional inefficiencies exerted a statistically significant adverse impact on SME access to trade finance (β = –0.381, p < 0.001), but fintech adoption was identified as a pivotal moderating variable (β = 0.217). Policy synergy, assessed through cross-agency coherence, exhibited a significant positive connection with financial accessibility (β = 0.303), and the model displayed substantial explanatory power (R² = 0.497, GOF = 0.531). This study enhances trade finance research by framing SME exclusion because of political economy and institutional structure. The results provide practical insights for banks, development finance institutions, and policymakers by demonstrating how strategic fintech adoption and collaborative policy alignment can address structural deficiencies. The study enhances post-pandemic economic resilience, financial equity, and inclusive globalisation by converting small enterprises from informal entities into players in the global value chain.