Potential of Islamic Finance as Alternative Financing Option for SMEs

Mahmut Erdem; Halim Tatli

doi:10.31436/ijema.v32i2.1190

Authors

Mahmut Erdem ?stanbul University, Türkiye
Halim Tatli Bingol University, Türkiye https://orcid.org/0000-0002-7940-0087

DOI:

https://doi.org/10.31436/ijema.v32i2.1190

Keywords:

Isl?mic finance, Participation banking and SME, Alternative finance, SME financing, Scale development

Abstract

This study aims at investigating the potential of Isl?mic finance as an alternative to the financing problem faced by companies operating as Small and Medium Enterprises (SMEs). Isl?mic finance is a sector that continues to develop. In addition, finance and markets are important in terms of their impact on the real sector. Addressing the impact of Isl?mic finance on these two situations not only reveals the basic motivation and necessity of the study but also emphasizes the originality and importance of filling the gap in the literature. Questionnaire forms were applied to 400 randomly selected SMEs operating in the provinces of Istanbul, Kocaeli, Sakarya, Bursa, Yalova, and Çanakkale by face-to-face survey technique. Explanatory and confirmatory factor analyses were applied to the scale within the scope of construct validity. Exploratory factor analysis determined that the scale has a 6-factor structure that explains approximately 76% of the scale. Therefore, it has been determined that the potential of Isl?mic finance as an alternative to SMEs has six dimensions. These dimensions are determined as Alternatives in terms of Personal Value Judgments, Sectoral Suitability, Financing Policies and Opportunities, Accessibility, Cost, and Access to Finance.

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