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Abstract
Small and medium-sized enterprises (SMEs) are largely responsible for the positive effects of the global economy. In Libya, small & medium companies have recently started to gain more attention to restructure the national economy and reduce a limited over-reliance on the predominately large-firm oil industry. Despite recent industry changes, access to funding remains a major obstacle for these organizations. Therefore, the aim of this study was to measure the mediating effect of attitude on the adoption of Islamic finance by Libyan SMEs. A conceptual framework has been proposed with five independent variables (knowledge and awareness, religious obligation, business support, reputation, and financial constraints), one mediating variable (attitude toward Islamic finance), and one dependent variable (adoption of Islamic finance). Several theories have been reviewed to develop this conceptual framework. A snowball sampling was employed to collect data from different Libyan SMEs. A total number 305 respondents were found and used for final data collection. Structural Equation modelling techniques was applied to test the hypothesis. Results clearly revealed that all the variables significantly affect the attitude toward Islamic finance, which eventually has a significant mediating effect on adoption, too. Based on the results, knowledge and awareness and religious obligation became the two most important factors for the Libyan SMEs to create a positive attitude toward Islamic finance. The Islamic finance industry’s steady growth has powered the demand for Islamic financing, especially among SMEs, which Islamic financial institutions control as the largest lender.
Published Version
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