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The potential of Islamic financial institutions in promoting small and medium enterprises (SMEs) in Ethiopia

Author

Listed:
  • Abdu Seid ALI

    (stanbul University, Center for Islamic Economics and Finance, Turkey)

  • Ibrahim BUSHERA

    (Ibn Haldun University, Department of Management, Istanbul, Turkey.)

  • Abdurahman Jemal YESUF

    (Hamad Bin Khalifa University, Department of Islamic Finance, Qatar.)

Abstract

It is universally proclaimed that SMEs are engines of growth and development in various countries in the world. Nonetheless, access to finance remained an acute obstacle.This paper aims toassess the potential of Islamic financial institutions in promoting SMEs to get access to alternative financial services in Ethiopia. Similar to other developingcountries, SMEs in Ethiopia have lack of access to finance and alternative financial services. Hence, the experience of other countries show that Islamic financial institutions have been providing alternative services based on risk sharing, asset-based and ethical principlesin order to achieve financial inclusion and wide-ranging growth. In order to encourage SMEs to get access to alternative source of finance, regulatory and legal frameworks, proper financial infrastructure, market and industry issues, awareness creation, and producing trained workforce should get proper attention

Suggested Citation

  • Abdu Seid ALI & Ibrahim BUSHERA & Abdurahman Jemal YESUF, 2020. "The potential of Islamic financial institutions in promoting small and medium enterprises (SMEs) in Ethiopia," Journal of Economics and Political Economy, EconSciences Journals, vol. 7(3), pages 188-203, September.
    • Handle: RePEc:cvv:journ1:v:7:y:2020:i:3:p:188-203
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing

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