Small and Medium Enterprises' (SMEs) Access to Islamic Banking Finance in Pakistan

  • Saba Ishaq

Student thesis: Doctoral ThesisDoctor of Philosophy


This study investigates Small and Medium Enterprises’ (SMEs) access to Islamic banking finance in Pakistan. Despite the significance of SMEs in the economic development of Pakistan, this sector is not shielded from the unavailability of adequate financing facilities. Banks are considered the primary source of financing SMEs all over the globe. However, banks in Pakistan lend to SMEs selectively and, at times, reluctantly. Islamic banks in Pakistan represent only 13% of the whole banking industry lending out of which just 3.7% is attributed to SMEs. It reflects Islamic banks’ unexhausted capabilities to meet a significant part of SMEs’ funding needs in Pakistan.

Strong structuration theory was drawn upon through every stage of the research. This study adopts a theoretically informed circular design which consists of the following interlinking parts: a clear objective to investigate the specific research problem, prior theory, theoretically informed research questions, interview questions based on theoretically specific data requirements and thematic data analysis which link the findings to the prior theory (Makrygiannakis and Jack, 2018). The empirical evidence was collected from thirty-five semi-structured interviews with SME owners/managers, Islamic bank managers and a Sharia board member.

The findings indicate that significant independent influences are exerted on the activities of SMEs by the external structures. These include Islamic banks, the government of Pakistan, the Federal Board of Revenue (FBR), academic institutions, the State Bank of Pakistan (SBP), Sharia boards and media. SMEs’ internal structures also play a vital role in shaping their practices while accessing Islamic banking finance. These include SME owner/manager’s characteristics, views on Sharia compliance of Islamic banks, preference for different sources of financing, knowledge of Islamic financial products, knowledge of accounting and financial reporting and motives to use Islamic banking finance. These internal and external structures of SMEs seeking to acquire Islamic banking finance interact with each other. As a result of active agency, the on-going patterns of structuration led to the outcomes that incorporate structural reproductions or structural transformations.
Date of AwardFeb 2022
Original languageEnglish
SupervisorUmair Riaz (Supervisor) & Melina Manochin (Supervisor)


  • strong structuration theory
  • Islamic financial system
  • qualitative inquiry
  • Sharia compliant financial products

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