Abstract
The paper seeks to investigate the characteristics and role of Islamic finance for enhancing access to finance for small and medium enterprises (SMEs) and micro and small and medium enterprises (MSMEs) in emerging economies specially with reference to Pakistan. The study explores into various SME financing options i.e. asset-based financing and equity-based financing offered by Islamic financial system and their inherent characteristics such as social equity, economic justice and financial support for entrepreneurial opportunities linked with real economy. On the practical front, the study has highlighted the current state of SME financing by Islamic banks in Pakistan and the financial needs of the SME sector thus highlighting the financing gap that exists in the market requiring policy and managerial focus by Islamic financial institutions in Pakistan. The role of Islamic finance is stressed as catalyst for enhancing financial inclusion of SMEs and MSMEs in emerging Islamic economies including Pakistan.
Keyword(s)
Islamic Finanace, Sharia Compiance, Small and medium enterprises, Pakistan