Concentration and Diversification Challenges in Moroccan Participatory Banking: An Empirical Analysis Using Bank Al-Maghrib Data (International Journal of Accounting, Finance, Auditing, Management and Economics)

Summary

• At year-end 2024, outstanding participatory financing in Morocco reached MAD 33.8 billion, representing a 19.9% increase year on year.p.2
• Participatory financing accounted for 86.9% of the total assets of participatory banks and windows in 2024, compared to 86.4% in 2023.p.10
• Financing allocation remained heavily concentrated in real estate at 78.7%, followed by equipment at 15.4% and consumption and treasury at 5.9% in 2024.p.2
• The Herfindahl-Hirschman Index (HHI) across the three economic purpose categories was calculated at 0.6466 (or 6,466 on a 0–10,000 scale), alongside a Shannon entropy of 0.6436.p.2
• Contractual instruments show extreme concentration, with Mourabaha representing 99% of participatory financing and Salam accounting for 1%.p.3

Key insights

1. Outstanding participatory financing reached MAD 33.8 billion at year-end 2024, growing by 19.9% over one year.p.2
2. Participatory financing represents 86.9% of the aggregate assets of Moroccan participatory banks and windows in 2024.p.10
3. Real estate is the dominant economic financing purpose, accounting for a 78.7% share and contributing 0.6194 to the total HHI in 2024.p.10
4. Equipment financing represented 15.4% of total outstanding financing, while consumption and treasury accounted for 5.9% in 2024.p.10
5. The HHI of 0.6466 corresponds to approximately 1.55 effective categories, reflecting an unevenly distributed financing portfolio.p.9
6. Shannon entropy reached 0.6436 in 2024, which translates to approximately 1.90 effective categories.p.9
7. Mourabaha contracts account for 99% of total participatory financing, while Salam accounts for only 1%.p.11
8. The indicative HHI decreased by 0.0579 points between 2022 and 2024, moving from 0.7045 to 0.6466.p.16