Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective

Economic development and growth are significantly linked to the consistent and sustainable sector of small and medium enterprises (SMEs). As a country that is trying to realize its dream after the 2011 Revolution, Libya is seeking to diversify its industry-based sector in order to reduce its over-de...

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Main Author:	Khalid Hassan Abdesamed
Format:	Thesis
Language:	en_US
Subjects:	Small business > Libya Small business > Finance
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id	my-usim-ddms-12772
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spelling	my-usim-ddms-127722024-05-29T04:58:55Z Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective Khalid Hassan Abdesamed Economic development and growth are significantly linked to the consistent and sustainable sector of small and medium enterprises (SMEs). As a country that is trying to realize its dream after the 2011 Revolution, Libya is seeking to diversify its industry-based sector in order to reduce its over-dependence on the volatile oil sector. To achieve this goal, the Libyan government launched the National Program for the Development of Small and Medium Enterprises in 2008 to frame policies and programs in cultivating Libyan SMEs. However, the access to funds for the development and sustainability of SMEs has become a major predicament in many developing countries, including Libya. Banks are the frontrunners in financing and advising SMEs. The main question of this research is, “Which of the SMEs can apply for and can access bank loans?” Four theories, namely; human capital, firm, business strategy, and information asymmetry, constitute the study’s theoretical framework. The three main objectives of the study are as follows: (i) to develop a bank loan model based on applicability, (ii) to develop a bank loan model based on accessibility, and (iii) to assess the tendency of SMEs to use the Islamic bank. Three models were developed using quantitative methods with a hypothetical-deductive testing approach. Model I (N = 364) used primary data on loan applications gathered from the questionnaires. Model II (N = 118) extracted the survey data from the same questionnaires. Model III (N = 364) used primary data on the tendency of SMEs to use Islamic banks gathered from the same questionnaires. The logistic regression and Mann-Whitney test indicate that the business experience of the firm’s owner does not have a significant relation with the firm’s application for a bank loan. The educational background of the firm’s owner, the firm’s size, collaterals, and loans with interest were found to be negatively related to application of the firm for a bank loan. However, the firm’s business plans and its start-up with bank loan were found to be positively related to the firm’s application for bank loans. Yet, business plans, experience, and educational background were insignificant to the firm’s access to bank loans. The firm’s age, size, and start-up with bank loan were negatively related to its difficulties in securing a loan. It is found the tendency to use Islamic bank varies between those firms which consider formal financing with the ones relying on informal financing with the latter tends more to use Islamic bank. This study can serve academic researchers, policy makers, and developing countries as a model of SMEs’ accessibility to external formal finance (i.e., conventional and Islamic finance) Universiti Sains Islam Malaysia 2014 Thesis en_US https://oarep.usim.edu.my/handle/123456789/12772 https://oarep.usim.edu.my/bitstreams/70bcf30a-193e-4b77-8b8d-b9e58fa11416/download 8a4605be74aa9ea9d79846c1fba20a33 Small business--Libya Small business--Finance
institution	Universiti Sains Islam Malaysia
collection	USIM Institutional Repository
language	en_US
topic	Small business--Libya Small business--Finance
spellingShingle	Small business--Libya Small business--Finance Khalid Hassan Abdesamed Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective
description	Economic development and growth are significantly linked to the consistent and sustainable sector of small and medium enterprises (SMEs). As a country that is trying to realize its dream after the 2011 Revolution, Libya is seeking to diversify its industry-based sector in order to reduce its over-dependence on the volatile oil sector. To achieve this goal, the Libyan government launched the National Program for the Development of Small and Medium Enterprises in 2008 to frame policies and programs in cultivating Libyan SMEs. However, the access to funds for the development and sustainability of SMEs has become a major predicament in many developing countries, including Libya. Banks are the frontrunners in financing and advising SMEs. The main question of this research is, “Which of the SMEs can apply for and can access bank loans?” Four theories, namely; human capital, firm, business strategy, and information asymmetry, constitute the study’s theoretical framework. The three main objectives of the study are as follows: (i) to develop a bank loan model based on applicability, (ii) to develop a bank loan model based on accessibility, and (iii) to assess the tendency of SMEs to use the Islamic bank. Three models were developed using quantitative methods with a hypothetical-deductive testing approach. Model I (N = 364) used primary data on loan applications gathered from the questionnaires. Model II (N = 118) extracted the survey data from the same questionnaires. Model III (N = 364) used primary data on the tendency of SMEs to use Islamic banks gathered from the same questionnaires. The logistic regression and Mann-Whitney test indicate that the business experience of the firm’s owner does not have a significant relation with the firm’s application for a bank loan. The educational background of the firm’s owner, the firm’s size, collaterals, and loans with interest were found to be negatively related to application of the firm for a bank loan. However, the firm’s business plans and its start-up with bank loan were found to be positively related to the firm’s application for bank loans. Yet, business plans, experience, and educational background were insignificant to the firm’s access to bank loans. The firm’s age, size, and start-up with bank loan were negatively related to its difficulties in securing a loan. It is found the tendency to use Islamic bank varies between those firms which consider formal financing with the ones relying on informal financing with the latter tends more to use Islamic bank. This study can serve academic researchers, policy makers, and developing countries as a model of SMEs’ accessibility to external formal finance (i.e., conventional and Islamic finance)
format	Thesis
author	Khalid Hassan Abdesamed
author_facet	Khalid Hassan Abdesamed
author_sort	Khalid Hassan Abdesamed
title	Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective
title_short	Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective
title_full	Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective
title_fullStr	Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective
title_full_unstemmed	Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective
title_sort	financing of small and medium enterprises (smes) in libya: determinants of external formal financing conventional and islamic perspective
granting_institution	Universiti Sains Islam Malaysia
_version_	1812444882348802048

Financing Of Small And Medium Enterprises (Smes) In Libya: Determinants Of External Formal Financing Conventional And Islamic Perspective

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