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Favoring the small and the plenty: Islamic banking for MSMEs

Disli, Mustafa; Aysan, Ahmet F.; Abdelsalam, Omneya

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Authors

Mustafa Disli

Ahmet F. Aysan



Abstract

While MSMEs form the backbone of many countries, most of them suffer from limited access to finance. We extend the literature by examining whether Islamic banks, compared to their conventional peers, favor more the MSMEs credit market segment in Turkey. We do this by considering various aspects of the lending behavior towards MSMEs (total lending, foreign currency lending, loan commitments, loan quality, and revenues) across different MSMEs size categories (micro, small and medium-sized firms). Our results show that once we control for bank-specific characteristics, we find that Islamic banks are more engaged with MSME financing and generate more revenues from servicing MSMEs. Concerning the quality of the MSME lending portfolio, no distinguishable patterns were observed between Islamic and conventional banks.

Citation

Disli, M., Aysan, A. F., & Abdelsalam, O. (2023). Favoring the small and the plenty: Islamic banking for MSMEs. Economic Systems, 47(1), Article 101051. https://doi.org/10.1016/j.ecosys.2022.101051

Journal Article Type Article
Acceptance Date Jun 23, 2022
Online Publication Date Sep 21, 2022
Publication Date 2023-03
Deposit Date Jan 30, 2023
Publicly Available Date May 30, 2023
Journal Economic Systems
Print ISSN 0939-3625
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 47
Issue 1
Article Number 101051
DOI https://doi.org/10.1016/j.ecosys.2022.101051
Public URL https://durham-repository.worktribe.com/output/1180413

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