The Role of Islamic Financing to Boost Small and Medium-Sized Enterprises in Saudi Arabia.

Abstract

Islamic banks have a wide interest in the Arab world and in Saudi Arabia in particular, as they contribute significantly to supporting and financing the economic situation in Saudi Arabia and supporting the young Saudi owners of small and medium enterprises. The advantage of this support is that funding is without interest and one of the priorities of Saudi Arabia 2030 Vision is to support the small and medium enterprises by encouraging Islamic banks to finance these facilities. The Ministry of Finance has set up a program to guarantee the support of small and medium enterprises by financing Islamic banks. The advantages of Islamic banks are the ease of procedures and the diversity of products offered to investors. They also provide investors with full support and guidance and help them overcome obstacles and solve problems. They, moreover, contribute to pushing the economic wheel of the Kingdom of Saudi Arabia and reducing the size of unemployment by providing commercial space for Saudi youth. The research based on mixed (quantitative and descriptive) approach. The aim of this study was to determine the impact of Saudi Islamic banks' support on small and medium enterprises in Saudi Arabia as follows: Quantitative: What is the effect of supporting Islamic finance on increasing the financing ratios and the number of guarantees in the regions of the Kingdom of Saudi Arabia? What is the impact of Islamic financing support on increasing the financing ratios between Saudi Islamic banks? What is the effect of supporting Islamic finance according to economic activities in Saudi Arabia? From the descriptive point of view: What is the impact of supporting Islamic finance on the financial performance of small and medium enterprises? What is the impact of supporting Islamic finance on the growth of small and medium enterprises? What is the impact of supporting Islamic finance on the access of small and medium enterprises to credit? What is the impact of supporting Islamic finance on financial literacy? The statistical methods of the two methodologies adopted as follows: Use the SPSS program to analyze, schedule, mark up, and draw the drawings and charts: Linear regression, standard deviation, arithmetical mean, and t-test to measure validity and consistency. The results showed that Islamic finance has contributed significantly to supporting the small and medium enterprises in terms of increasing financing rates in the various regions of the Kingdom according to the registered enterprises, increasing the financing ratios of the Saudi Islamic banks by increasing the number of establishments and increasing the financing according to various economic activities. The Islamic support through Islamic finance for small and medium enterprises has a positive effect, which is evident through the answers of investors to questions related to the performance of the questionnaire, where it found positive in improving the financial performance and the growth of small and medium enterprises and their access to the required credit. It also contributed to erasing the financial disability of investors and helping them to make decisions. In addition, the study recommends spreading the culture of economic work for the Saudi youth by diversifying the media to convey a clear idea about the support of the Islamic finance for SMEs. It also recommends presenting the experiences of previous investors that have succeeded in the field by supporting Islamic finance for their small and medium-sized enterprises.