Fortuning the small and the plenty: Islamic banking for MSMEs
An Ethical Finance, Accountability and Governance Seminar.
Abstract: While MSMEs form the backbone of many countries, most of them suffer from limited access to external finance. We provide an additional dimension to the literature by examining whether Islamic banks, compared to their conventional peers, fortune more the Turkish MSME segment of the credit market. We do this by considering various aspects of MSME lending behavior (lending, foreign exchange lending, loan commitments, loan quality, revenues, and cyclicality) across different MSME size categories (micro, small and medium-sized firms). Our findings in general, and throughout different size categories, confirm that Islamic banks vis-a-vis MSMEs are more engaged with foreign exchange lending, total lending, and issuance of letters of credit. We also find that Islamic banks generate more revenues from their MSME lending portfolio. The quality of their MSME loan portfolio is, however, not unequivocally different. Our findings further show that MSME lending by Islamic banks tend to be on average less cyclical.
Professor Ahmet Faruk Aysan received his B.A. in economics from the Bogaziçi University in 1999 and both his M.A. (2001) and his Ph.D. (2005) in economics from the University of Maryland College Park. He became an Associate Professor in 2008. Dr. Aysan, who served as a consultant at various institutions such as the World Bank, the Central Bank of the Republic of Turkey and Oxford Analytica, has been lecturing at the Department of Economics at Bogaziçi University since 2005. Before joining the Istanbul Sehir University as a professor, Dr. Aysan has been the Board Member and Monetary Policy Committee Member of the Central Bank of Republic of Turkey. He has also served as the Deputy Director of the Center for Economics and Econometrics at Bogaziçi University, a member of the G-20 Financial Safety Net Experts Group, a member of the Advisory Board of Social Sciences and Humanities Research Group of TÜBİTAK, and a National Expert in 'Socio-Economic Sciences and Humanities' under the Seventh Framework Programme of the European Union.
Dr. Aysan's fields of specialization are international finance, macroeconomics, political economy, banking and finance, econometrics, governance and development and he is a member of editorial and advisory boards of several international journals. Dr. Aysan, who has many articles published in academic journals, was awarded with the Bogaziçi University Foundation Publication Awards; Bogaziçi University Foundation Academic Promotion Awards and the Ibn Khaldun Prize for the best paper on the North African and Middle Eastern Country Studies granted by Middle East Economic Association. Dr. Aysan has also served at the advisory board of the Contemporary Turkish Studies at London School of Economics and Political Sciences (LSE) European Institute. Dr. Aysan is currently the Dean of the School of Management And Administrative Sciences at the Istanbul Sehir University.