The main purpose of the study is to examine the willingnesslof Moroccanlsmall andlmediumlsizelenterpriseslto adopt Islamic finance methods andlthe factors thatlmay affect theirldecision. The researchlmethod is based on a modified version of theory of planned behavior (TPB). A total of 250 questionnaires were randomly distributed to SME’s managers but only 167 were valid for Analysis. The empirical findings based on our research framework indicate that most of SMEs are potential user of Islamic finance instruments. Noticeably, cost plays a major role in determining the likelihood of demand of these products by Moroccan SMEs. In addition, business support, risk sharing, suitability and self-efficacy were also found significant in determining the probability of use of Islamic financial methods by SME. The findings extend our understanding of Moroccan SMEs attitudes and awareness towards Islamic finance, and they are of key importance in informing future financial industry practice and financial policy formation in Morocco.

Theoretical explanations based on information asymmetry constitute the dominant paradigm of the near disappearance of PLSs (profit and loss sharing). This assumption implicitly implies a hypothesis on the power of contractual choice exclusively monopolized by Islamic banks. The theoretical positioning in this study to explain the arbitrage between PLSs and markups is based on a lack of demand. In this sense, this paper attempts to verify the demand trade-off of Moroccan companies between PLSs and markups. A logistic regression was used to establish several findings. The evidence suggests that past banking relationships with conventional banks and debt maturity both favor the commercialization of markups. On the other hand, financial quality of firms has no direct impact on the choice between PLSs and markups. This assertion implies that it is incorrect to assume that sole entrepreneurs undertaking high-risk projects choose to be funded by PLSs. Combining that with the fact that companies that agree to be funded by PLSs agree to share profits, private information and decision-making power, it can be said that PLSs can have a good chance of thriving in Morocco if Islamic banks provide a favorable climate for their marketing.

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This paper compares alternative monetary policy rules in a small open economy that experiences internal shocks (productivity shocks) and external shocks to terms of trade and the foreign demand. A comparison of the volatility of the macroeconomic variables such as inflation, output, terms of trade, trade balance, investment and exchange rates under the different monetary rules is set to lead to the choice of the optimal exchange rate regime.I will show that these regimes can be ranked in terms of their implied volatility for the considered macroeconomic variables. A two-country version of the Calvo sticky price model is used to analyze the macroeconomic implications of four alternative monetary policy regimes for a small open economy: domestic inflation targeting, managed float, CPI targeting and an exchange rate peg. The degree of exchange rate passthrough is very important for the assessment of monetary rules. I find that the CPI targeting rule is the best policy (from a macroeconomic stability viewpoint) in an economy that exhibits lagged exchange rate passthrough. With low pass-through, both the domestic and the overall prices respond sluggishly to shocks, and it is more efficient for the monetary authority to target the overall CPI rather than just domestic prices. In a low passthrough environment, the policy maker can simultaneously strictly target (CPI) inflation, but still allow high volatility in the nominal exchange rate to stabilize the real economy in face of shocks. The low rate of passthrough ensures that exchange rate shocks do not destabilize the price level. An important feature of low passthrough is that it eliminates the trade-off between output volatility and inflation volatility in the comparison of fixed relative to floating exchange rates.

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