Abstract:
Presently the competition within the banking sector is escalating every
day. At the present, there is a wide spread perception of inequality in the
distribution of income and wealth. People feel dissatisfied with the
performance and consequences of the monetary and financial sector. The
inception and awareness of Islamic banking and finance has even brought
west’s inclination towards it. Based on Quran and Sunnah, Islamic Financial
System prohibits all kinds of “Riba” so that a welfare society could be
created where the people are saved from exploitation and their basic needs
are met as it promotes the act of benevolence. (Surah al-Baqarah, verses
275-81)
On the contrary, the growth in Islamic banking sector in Pakistan is slow.
Its image is still implicit in the mind of a lay man as of having
complicated and lengthy procedure of doing business, which is curtailing
its ability to tap its market for potential clients. People see uncertainty
in this system as to whether it is lucrative in terms of money. Whereas
money, primarily, has no intrinsic utility, it is only a medium of
exchange. It makes a vital difference between Islamic financing and
conventional financing in terms of earning profit and interest. Also, there
is little or no effort put for promotional and advertisement techniques to
trigger its demand among the target market. Still, Islamic finance forges a
closer link between real economic activity that creates value and financial
activity that facilitates it. Its end product is welfare of people and the
economy.
This is a descriptive, quantitative, and hypothesis testing study conducted
on the satisfaction of Micro and Small & Medium Enterprises (SME) of
Pakistan with Islamic Banking. SMEs of Pakistan are frequently facing the
problem of financing. The purpose of this study is to explore the potential
of Islamic Banking in facilitating the SME sector in Pakistan.
