Role Of Digital Financial Services In Enhancing Microfinance Access For Micro-Entrepreneurs In Pakistan: Evaluating The Effectiveness Of Digital Financial Platforms In Improving Microfinance Penetration And Meeting The Financial Needs Of Micro-Entrepreneu

Abstract

This research is aimed at exploring the Digital Financial Services (DFS), a cluster of services that allow its users to manage and oversee their finances. The study was a move to evaluate access to microfinance by micro-entrepreneurs in Pakistan with special focus on gender disparities and socio-economic constraints in the region. An explanatory sequential design based on a mixed-method study was used. DSF adoption was surveyed using quantitative survey data and qualitative interviews. Patterns of usage of women and other micro entrepreneurs were examined. Participants also indicated that they face challenges when undertaking their micro entrepreneurial activities. DFS adoption is a major advancement in microfinance accessibility through lowering the transaction costs, speeding of loan disbursements and offering convenience, which leads to economic inclusion and growth of the entrepreneurs. The adoption is, however, lopsided because of the digital literacy gaps. This is also unevenly distributed by infrastructural constraints, socio-cultural constraint, and regulatory constraints. Women micro-entrepreneurs have been observed to be faced with barriers that are associated with mobility limitation, lack of trust and absence of custom financial products. The research recommends that there should be an immediate urgency to develop products offered by DFS, that are gender sensitive, digital literacy programs, investment in infrastructures, and regulatory support systems. The study emphasizes a vibrant need for gender-sensitive DFS product development. Targeted digital literacy programs, infrastructural investments, and supportive regulatory frameworks are also necessary to promote DFS services. Addressing these challenges will lead to policymakers and financial institutions to harness and, DFS to promote inclusive economic empowerment, reduce poverty, and stimulate sustainable development in Pakistan’s micro-entrepreneurial sector.