Impact of Blockchain Technology on Financial Reporting in Small and Medium-Sized Enterprises (SMEs) in Pakistan

Abstract

Purpose: The aim of the study was to assess the impact of blockchain technology on financial reporting in small and medium-sized enterprises (SMEs) in Pakistan. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicated that blockchain's decentralized ledger system enhances transparency and accuracy in financial data recording and reporting. It reduces the risk of fraud and manipulation due to its immutable nature, ensuring that transactions are securely recorded and traceable. This technology streamlines processes, such as auditing and reconciliation, leading to cost savings and increased efficiency for SMEs. Additionally, blockchain's real-time data availability improves decision-making capabilities and enhances trust among stakeholders. However, challenges such as regulatory compliance and implementation costs remain, requiring careful consideration for SMEs looking to adopt blockchain for financial reporting. Implications to Theory, Practice and Policy: Diffusion of innovations theory, agency theory and resource-based view may be used to anchor future studies on assessing the impact of blockchain technology on financial reporting in small and medium-sized enterprises (SMEs) in Pakistan. In practice, SMEs are encouraged to initiate pilot projects that leverage blockchain-based financial reporting solutions. On the policy front, advocating for regulatory clarity and supportive frameworks is essential to promote blockchain adoption among SMEs.