Contribution of Islamic Banks in Financing Small and Medium Enterprises in the Kingdom of Bahrain

Abstract

The small and medium enterprises in the Kingdom of Bahrain are of great significance due to their contribution to economic activity; they come after the large companies and no less important, as they absorb large numbers of workers, thus playing a role in reducing unemployment. However, small and medium enterprises encounter difficulties in the funding process especially in obtaining funding for start-ups, especially as commercial banks are sometimes reluctant to fund. New businesses that are considered high-risk. Thus for these reasons Islamic banks used financing instruments characterized by participation ,speculation and cost-plus, through direct cooperation with the government institutions that are responsible for the promotion of small and medium-size enterprise such as the government program known as Tamkeen. The study concluded that the use of Islamic modes of financing contributed significantly to the financing process, which was reflected directly on the Bahraini economy.