Digital Banking and Sme Growth in Bangladesh: An Econometric Analysis of GDP Contribution (2015–2024)

This study investigates the relationship between digital banking adoption and the growth of Small and Medium Enterprises (SMEs) and their contribution to gross domestic product (GDP) in Bangladesh over the period 2015 to 2024. Employing a panel data econometric framework with Fixed Effects (FE) and Random Effects (RE) estimation, the study draws on secondary data sourced from Bangladesh Bank Annual Reports, World Bank and IMF Financial Access Databases, Bangladesh Bureau of Statistics (BBS) national accounts, and SME Foundation Bangladesh publications. The empirical findings reveal that digital banking penetration, measured through mobile financial service (MFS) transaction volumes, digital credit disbursement, and internet banking adoption rates, exerts a statistically significant and positive effect on SME revenue growth, employment generation, and ultimately GDP contribution. The Hausman specification test confirms the superiority of the Fixed Effects model in capturing time-invariant heterogeneity across SME sub-sectors. Furthermore, the study identifies significant moderating effects of financial literacy, digital infrastructure quality, and the regulatory environment on the digital banking and SME growth nexus. The results carry important policy implications for Bangladesh Bank's Financial Inclusion Strategy and for broader development finance frameworks in emerging economies. JEL Classification: G21, L26, O16, O33, C23