Financial Literacy, Digital Financial Access, and SME Distribution Performance in the UAE: A Mediation Analysis

Abstract

Purpose: This study aims to examine the relationship between FL and SME distribution performance, and to investigate the mediating role of access to digital finance in strengthening distribution-related business efficiency within the context of the United Arab Emirates. The research seeks to provide empirical evidence on how financial knowledge and digital financial accessibility jointly influence distribution-channel performance, operational efficiency, and SME sustainability.
Design/methodology/approach: The study adopts a quantitative research design, using a structured questionnaire distributed to SME owners and managers. A total of 170 valid responses were collected and analysed using statistical software. Data screening procedures were conducted, including missing data analysis, outlier detection, multicollinearity checks, and normality testing. Regression and mediation analyses were employed to test the proposed hypotheses and examine both direct and indirect relationships among the variables.
Findings: The findings reveal that FL did not have a significant direct effect on SME distribution performance; however, it exerted a significant indirect effect through access to digital finance. Additionally, access to digital finance fully mediates the relationship between FL and SME distribution performance. SMEs with better access to digital financial services demonstrated improved customer reach, payment efficiency, and distribution-channel effectiveness.
Research limitations/implications: The study is limited to SMEs operating within the United Arab Emirates and is based on cross-sectional data, which may limit the generalisability of the findings. Future research is recommended to apply longitudinal designs and expand the study to different geographical contexts to validate and extend the results. The study should be interpreted in light of several limitations. First, the sample was predominantly composed of female respondents (88.2%), employees (62.4%), service-sector SMEs (80.0%), and relatively young firms operating for 3–5 years (78.2%). Consequently, the findings may not be fully representative of the wider SME population in the UAE. Second, the use of convenience sampling limits the generalisability of the findings. Future studies should employ probability sampling techniques and include SMEs from a wider range of industries, ownership structures, and organisational maturity levels. The study relied on self-reported data collected from a single source using a cross-sectional survey, which may increase the risk of common method bias. Although procedural measures such as anonymity and voluntary participation were implemented to minimise this risk, future studies are encouraged to employ formal statistical assessments (e.g., Harman’s single-factor test or marker-variable techniques) to further evaluate the potential influence of common method bias.
Practical implications: The results highlight the importance of promoting FL programmes and expanding access digital financial infrastructure to support SME distribution activities. Policymakers and financial institutions should focus on strengthening digital payment systems, online transaction capabilities, and fintech accessibility to improve SME distribution efficiency and competitiveness.
Social implications: Enhancing FL and digital financial inclusion can contribute to broader economic development by empowering SMEs, increasing employment opportunities, and fostering innovation within the economy.
Originality/value: This study contributes to the distribution science literature by integrating FL and digital financial access within a distribution-performance framework. It provides empirical evidence from the UAE context on how digital finance supports SME distribution efficiency and operational competitiveness.
Conclusion: The study concludes that financial knowledge and digital financial inclusion are essential drivers of SME growth and sustainability. Strengthening access to digital financial services can significantly improve operational efficiency and strategic decision-making among SMEs in the UAE.