Journal of Islamic Banking and Finance

SME Financing in Bangladesh: A Comparative Analysis of Conventional and Islamic Banks
Md. Ariful Islam, Salahuddin Yousuf, Md. Imtiaj Rahman

Abstract
SME financing is now constructing the economy building of the country with the major key role players of banking industry which will appear advanced in near future. Analyzing the performance of SME financing by the banking industry this study identifies the major SME investors among banking industry. It compared the performance of banks grouping them into two broad categories: conventional banks and Islamic banks. Disbursement of SME Loan by all selected conventional banks shows about 1.5 times growth from Year 2009-2011. BRAC bank is the leading SME loan providers among the conventional banks and it captured 5.87% market share within SME banking arena of Bangladesh. On the other hand, disbursement of SME Loan by all Islamic banks portrays about 1.35 times growth. Among the top five leading SME investors IBBL is the top. Although SME financing seems very promising, it has various problems such as risk profile, lack of collaterals, lack of uniform definition of SME, participation of women and complexity in distribution.

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