Conference Paper

Determinants of Social Media-based Digital Financing among Micro-Technological Firms in Ilaro Town, Nigeria.

Abstract The increasing financing gap among micro and small firms in developing countries indicates that conventional financing approaches have limited capacities. This study, therefore, attempts to examine the factors that determine the usage of social media-based digital financing as an alternative source of finance among micro-technological firms in Ilaro town, Yewa South Local Government area of Ogun State. The study serves as a follow-up study to a particular baseline study which had hitherto employed a random sampling technique to select 143 owners and managers of micro-technical firms in the study area. Empirical evidence from logit regression and marginal effects analysis reveals that a one-unit increase in financial literacy and networking significantly increases the probability that micro-technological firms in Ilaro town use social media financing by 0.40 and 0.13 respectively. However, one naira increase in the transaction cost incurred for social-media financing significantly causes a 0.42 decrease in the probability of using digital means. The study, therefore, affirms that financial literacy, networking, and transaction costs are significant drivers of intention to use social-media-based digital financing among owners and managers of micro-technological firms in Ilaro town of Yewa South Local Government area, Ogun State. It recommends improved networking and financial literacy of owners and managers of micro-technological firms in the study area. Finally, digital financial services providers are urged to lower transaction costs associated with the use of social-media financing by micro-enterprises. Keywords: Micro-firm, social media, digital financing, logit model