The Effect of Blockchain Technology on SME Financial Reporting in Nigeria: A Case Study of SMEs in Lagos State
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Background of the Study
Blockchain technology, renowned for its transparency, security, and immutability, is increasingly recognized as a game-changer in financial reporting. By leveraging distributed ledger systems, businesses can ensure accurate and tamper-proof records, significantly enhancing trust and accountability in financial management (Igwe & Oyetunde, 2023).
In Lagos State, the commercial nerve center of Nigeria, SMEs play a vital role in economic development. However, traditional financial reporting methods are often riddled with errors, delays, and fraud, undermining investor confidence and operational efficiency (Olumide & Hassan, 2024). Blockchain technology offers solutions by enabling real-time financial updates, reducing the likelihood of discrepancies, and ensuring compliance with regulatory standards.
Despite these advantages, the adoption of blockchain technology among Lagos SMEs is limited due to factors such as high implementation costs, technical complexity, and lack of awareness. This study investigates how blockchain technology affects financial reporting in Lagos SMEs, exploring the challenges and opportunities associated with its adoption.
Statement of the Problem
Financial reporting in many Lagos SMEs is characterized by inefficiencies, lack of transparency, and vulnerability to fraud. These challenges not only compromise business operations but also hinder access to external financing and partnerships (Adebayo & Eze, 2024). Blockchain technology has the potential to address these issues by providing secure, transparent, and efficient reporting mechanisms.
However, the low adoption rate of blockchain technology among Lagos SMEs indicates a significant knowledge and implementation gap. Understanding the effects of blockchain on financial reporting is crucial for addressing these challenges and fostering technological integration in SME financial management.
Objectives of the Study
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To examine the effect of blockchain technology on financial reporting practices in Lagos SMEs.
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To identify the challenges SMEs in Lagos face in adopting blockchain technology.
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To propose strategies for facilitating blockchain adoption in financial reporting among Lagos SMEs.
Research Questions
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How does blockchain technology affect financial reporting practices in Lagos SMEs?
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What challenges hinder the adoption of blockchain technology by Lagos SMEs?
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What strategies can enhance blockchain adoption in financial reporting among Lagos SMEs?
Research Hypotheses
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Blockchain technology has no significant effect on financial reporting practices in Lagos SMEs.
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Challenges associated with blockchain technology adoption do not significantly affect its implementation in financial reporting.
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Strategies for blockchain adoption do not significantly enhance financial reporting practices in Lagos SMEs.
Scope and Limitations of the Study
This study focuses on SMEs in Lagos State, analyzing the impact of blockchain technology on their financial reporting practices. Limitations include the novelty of blockchain technology in Nigeria, leading to limited access to data, and potential resistance from SMEs due to misconceptions about blockchain.
Definitions of Terms
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Blockchain Technology: A distributed ledger system that records transactions securely, transparently, and immutably.
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Financial Reporting: The process of preparing and presenting financial statements that reflect an organization’s financial performance and position.
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Transparency: The quality of being open, clear, and easily understood in financial and operational dealings.
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