Empirical investigation of SMEs’ perceptions towards PLS financing in Morocco

Abstract

Purpose The main purpose of the study is to examine the willingness of Moroccan small- and medium-sized enterprises (SMEs) to adopt profit and loss sharing (PLS) method of finance and the factors that may influence their decision. Design/methodology/approach The research model is based on the decomposed theory of planned behaviour (DTPB). A total of 340 questionnaires were randomly distributed to SMEs’ owner-managers, out of which 177 were collected and only 153 were valid for analysis. Factor analysis and partial least squares regression were subsequently applied. Findings The results showed that cost, loss of control, constrained access to conventional debt, financial suitability, stage of development as well as religious beliefs have a significant impact on the SMEs’ attitude towards PLS modes. Likewise, normative belief was also found to have a significant influence on subjective norm, by particular reference to the family, financial external consultants and internal managers, as the main referent groups. In addition, finally, attitude and perceived behavioural control were found to have a significant impact on the intention to adopt PLS financing by Moroccan SMEs. Research limitations/implications The sample is not representative; hence, the findings cannot be generalized to all Moroccan SMEs. Furthermore, the variables and dimensions used are not exhaustive. With regard to implications, the study confirms the applicability of the DTPB to SME financing questions. Moreover, this study provides great indications to the practitioners, investors, policy makers and regulators on the perception of the Moroccan entrepreneurs, which should be taken into consideration to establish the necessary strategies to attract them. Originality/value This paper verifies the applicability of the DTPB in another area, that is, adoption of PLS instruments and contributes to explain the entrepreneurs’ perceptions towards theses modes of financing.

Exploring Small and Medium Enterprises’ Perceptions Towards Islamic Banking Products in Morocco

“…Wahyuni (2012) conducted a study in Indonesia and found that knowledge of Islamic finance principals and products is an important factor in accepting Islamic banking. In addition, Sabirzyanov (2016) highlighted the positive correlation between the level of the client's knowledge of Islamic financial contracts and their willingness to deal with Islamic banks (Badaj & Radi, 2018). Therefore, this study raises the following hypothesis:…”

“…The search for financing is triggered by the need to cover financial requirements that may include diverging objectives as financing acquisitions, developing new products, customer segmentation or geographies, repaying loans, diversifying wealth or passing on the company (Poutziouris, 2001). In this study, suitability is measured by the extent to which Islamic modes of finance is appropriate to meet SMEs' financial requirement (Badaj & Radi, 2018). Hence, we hypothesize that attitude should be positively affected by a higher perceived adequacy of Islamic financing instruments:…”

“…As for subjective norms, we replaced it by religious norms, because Islamic finance is not well developed in morocco. The lack of experience could lead to unclear results in the case of subjective norms (Badaj & Radi, 2018). Taken into account the chosen theoretical framework, we developed the following hypothesis:…”

“…They represent more than 95% of the total number of operating companies, accounting for more than 30% of GDP and 48% of total employment. Debt is the most common solution for SMEs to meet their operational and investment needs (Badaj & Radi, 2018). However, access to conventional debt requires tangible collateral and high interest rates, which are a major obstacles for Moroccan SMEs (Bengrich, 2006, Echatibi, 2010, Aabi, 2014.…”

“…Most of the extent literature focuses on examining the perception and the attitude of consumers towards Islamic banking industry (Badaj & Radi, 2018). However, just a few studies focus on the intention and the attitude of firms towards Islamic finance (Edris & Almahmeed, 1997;Jalaluddin, l1999;Ahmad & Haron, 2002;Osman & Ali, 2008;Gait & Worthington, 2009).…”