The Impact of the Islamic Financing in Small and Medium Enterprises on Economic Development Indicators

Abstract

The study aimed to demonstrate the impact of Islamic banking financing in small and medium enterprises on economic development indicators represented by their dimensions (unemployment, poverty, inflation) in Jordanian Islamic banks during the period (2011-2022). To achieve the objectives of the study, the descriptive analytical approach was followed. The study population consisted of Jordanian Islamic banks, and the sample included all Jordanian Islamic banks representative of the study population. The data necessary to measure the study variables was collected from the annual financial statements issued by the Islamic banks sampled for the study and reports issued by the Central Bank of Jordan and all Jordanian banks. Descriptive statistical methods (arithmetic means, standard deviations, maximum and minimum values) and analytical statistical methods (simple linear regression analysis) available on the E-Views software were used to describe the study variables and test its hypotheses. The study found that there is no impact of Islamic banking financing in small and medium enterprises on economic development indicators represented by their dimensions (unemployment, poverty, inflation) in Jordanian Islamic banks. The study recommended diversifying Jordanian Islamic banks into financing programs and products that suit the nature of small and medium enterprises, and are compatible with the principles of Islamic Sharia, which enhances the ability of these projects to expand, grow, and provide job opportunities, and conduct a continuous evaluation process of the impact and role of its financing operations for small and medium enterprises on economic development indicators, especially unemployment, poverty and inflation, which helps it identify challenges and areas that require improvement, and direct its financing policies towards meeting social and economic needs and achieving its goals.

Keywords: Islamic Banking Financing, Small and Medium Enterprises, Unemployment, Poverty, Inflation, Jordanian Islamic Banks.