FINANCIAL CHALLENGES OF SMES AND FINTECH-BASED SOLUTION STRATEGIES IN THE TRANSITION TO AN INNOVATIVE ECONOMY (THE CASE OF AZERBAIJAN)

Abstract

This study analyzes the structural barriers faced by Small and Medium-Sized Enterprises (SMEs) in Azerbaijan in accessing finance and the potential contributions of FinTech-based solutions in the transition to an innovative economy. Conducted using a mixed-methods approach, the research evaluates survey data collected from 53 SME managers alongside up-to-date statistics from national and international institutions.

The findings indicate that the vast majority of SMEs consider bank interest rates to be high and collateral requirements excessively strict. Financial barriers are not only cost-related but also have a multi-layered structure arising from institutional and knowledge-based factors. The study also finds that FinTech, crowdfunding, P2P lending, and digital financing tools are still underutilized in Azerbaijan, yet they present a strategic opportunity for transitioning to an innovation-driven economy.

Policy recommendations focus on strengthening risk-sharing mechanisms, accelerating FinTech regulations, increasing financial literacy, and developing alternative financing markets. The study highlights that Azerbaijan’s current banking-centered financing model is unsustainable and underscores the need for a new digital finance-based architecture.