Is small the new big? Islamic banking for SMEs in Turkey

Aysan, Ahmet Faruk; Disli, Mustafa; Ng, Adam; Öztürk, Hüseyin

doi:10.1016/j.econmod.2015.12.031

Cited by 70 publications

(37 citation statements)

References 24 publications

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“…For example, most of the credit exposure in Islamic banks happens through Murabaha financing, in which the bank purchases assets on behalf of the clients and sells these assets, usually in installments, to these clients at a cost that includes a disclosed margin. This reduces concerns about diversion of funds into unproductive projects or to a project other than the agreed one (Shaban et al, 2014;Aysan et al, 2016). Most lending in Islamic banks is directed to a specific project under the premises of utmost good faith.…”

Section: Background and Rationalementioning

confidence: 99%

“…Further, given the importance of SMEs for economic development, there has been increased scrutiny on whether bank orientation (i.e. Islamic versus conventional banks) is an important determinant of credit supply (e.g., Shaban et al, 2014;Aysan et al, 2016). If Islamic banks indeed behave more prudential than their conventional counterparts, then they should record a comparatively lower growth in NPL with increased bank lending.…”

Section: Introductionmentioning

confidence: 99%

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Small business lending and credit risk: Granger causality evidence

Aysan

Disli

2019

Economic Modelling

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Because of their opaque nature, SMEs are overly reliant on bank lending. Therefore, we examine whether banks' credit supply to SMEs are affected by their financial conditions. To this end, we employ a Granger causality analysis to examine whether there is an indication of a significant direction of determination between SME lending and non-performing SME loans. The results reveal no bidirectional relationship between SME lending and NPL for the entire banking sector. For Islamic banks, however, we find two-way linkages between these two parameters: a negative causation is running both from SME lending to NPL growth and from NPL to SME lending. Given Islamic banks' deposit-oriented funding practices and their adherence to profit-and-loss sharing principles, this finding suggests the presence of heightened market discipline within the Islamic banking system.

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Section: Background and Rationalementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Small business lending and credit risk: Granger causality evidence

Aysan

Disli

2019

Economic Modelling

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“…Further, recent research suggests that conventional banks put more weight on collateral in their credit allocation decisions (e.g. Aysan, Disli, Ng, & Ozturk, ; Shaban, Duygun, Anwar, & Akbar, ). Because of their opaque nature, especially the small and medium‐sized enterprises (SMEs) segment of the market seems to face credit constraints from this practice (Carpenter & Petersen, ).…”

Section: Introductionmentioning

confidence: 99%

“…Despite their strong growth, Islamic banks still do not hold a significant place in the banking industry, which forces them to target the untapped SME market. Recent empirical results using data from Indonesia (Shaban et al., ) and Turkey (Aysan, Disli, Ng, et al., ) show that Islamic banks’ willingness to finance SMEs is significantly higher than that of conventional banks. However, given the growing body of evidence that small businesses are more exposed to economic and policy shocks (see e.g.…”

Section: Introductionmentioning

confidence: 99%

Bank lending channel in a dual banking system: Why are Islamic banks so responsive?

2017

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We examine the interest rate sensitivity of both deposits and credits at Islamic and conventional banks in Turkey. We find that the bank lending channel is especially operative for Islamic banks. Impulse responses for conventional and Islamic banks reveal that Islamic bank depositors’ sensitivity to policy rate changes is substantially larger than that of conventional bank depositors. Next to heavily dependence on deposit funding, we consider that inertia in Islamic bank deposit rates impedes these banks to keep those depositors who consider the opportunity cost of monetary policy rates is unbearable. On the lending side, we obtain similar results, implying that tight monetary policy leads to a larger contraction in Islamic bank credits. This finding is a reflection of the favourable attitude of Islamic banks towards small and medium‐sized enterprise (SME) financing. When similar relationships are analysed for currency and inflation shocks, we again find larger responses for Islamic banks showing the cyclical nature of SME credits.

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“…His role on the equity and employment opportunities for the community and contribute to foreign exchange earnings have shown that small businesses are not only active but productive (Mc Namara et al, 2017). In a broader context where small industries will be able to contribute greatly to the growth of national development (Aysan et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

What is the Best Strategy to Develop Creative Industry in Indonesia?

Prasnowo¹,

Adriansyah²,

Hidayat

2019

SMBR

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Small and Medium Enterprises (SMEs) have an important role and strategic for economic growth. This is because at the time of the economic crisis in Indonesia, SMEs are the economic sectors which have the most excellent durability. Wedoro Village in Sidoarjo city, Indonesia, is famous for the footwear creative industry especially slippers and shoes. A wide variety of slippers and shoes with different types available. Stores and outlets are widespread across the village. Wedoro region has been known as one of the predecessors of creative industries in the field of footwear. Currently the industrial centres of creative footwear is experiencing a decline in sales compared with its heyday in 2001-2006 years ago. This research aims to design a development strategy of the creative industry centre in Wedoro by using SWOT analysis and grand strategy. The results of this study indicate that the cause of the decline in sales is a flood of Chinese products, rising raw material prices, and the lack of innovation in product design. Hence, creative industry in Indonesia especially in Wedoro Village might need a guidance from the government in developing innovation in product design and marketing. It is therefore expected that the existence of a creative industry in Wedoro can grow and create occupations especially for local residents and also increase the revenue of the Sidoarjo city.

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Is small the new big? Islamic banking for SMEs in Turkey

Cited by 70 publications

References 24 publications

Small business lending and credit risk: Granger causality evidence

Small business lending and credit risk: Granger causality evidence

Bank lending channel in a dual banking system: Why are Islamic banks so responsive?

What is the Best Strategy to Develop Creative Industry in Indonesia?

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