Participatory Banks as an Alternative Source of SME Financing in Morocco: Evidence from Two-Group Discriminant Analysis (International Journal Of Applied Management And Economics)

Summary

• SMEs represent more than 90% of businesses in Morocco, yet accessing bank credit remains one of their most significant constraints.p.3
• The quantitative study investigates a sample of 171 SMEs across the regions of Casablanca-Settat and Rabat-Salé-Kenitra, which represent 54.83% of business creation in Morocco.p.8
• The surveyed sample is dominated by the Casablanca-Settat region with 73.47% (126 SMEs) and the trade sector with 34.44% (59 SMEs).p.8
• A total of 79% of surveyed SMEs consider the establishment of participatory banks in Morocco to be a new alternative for SME financing.p.2
• Two-group discriminant analysis reveals that 74.9% of SMEs (128 businesses) affirmatively classify participatory banking as a viable financing alternative.p.16
• The canonical discriminant model achieves an overall correct reclassification rate of 79.5% for original observations and 77.8% for cross-validated observations.p.16

Key insights

1. 1. More than 90% of all enterprises in Morocco are SMEs, yet traditional banking constraints limit their growth and value-added contribution.p.3
2. 2. A survey of 171 Moroccan SMEs confirms that 79% perceive participatory banking as an alternative financing source.p.2
3. 3. The cost of financing and the compliance of products with Sharia law are the two most discriminating factors influencing the choice of participatory banks.p.2
4. 4. Trade constitutes the largest industry segment in the surveyed SME sample at 34.44%, followed by construction and real estate at 23.25%.p.8
5. 6. The discriminant classification model successfully reclassifies 79.5% of original SME observations into their respective groups.p.17
6. 7. Participatory banks are advised to enhance competitiveness by offering profit-and-loss sharing contracts such as Mudarabah and Musharakah.p.19