Determinants of SME Adoption of Profit-and-Loss Sharing Finance in Morocco

Abstract

This study tests whether the limited deployment of Profit-and-Loss Sharing (PLS) instruments among Moroccan small and medium enterprises (SMEs) is driven primarily by regulatory constraints or by demand-side informational gaps. A structured questionnaire was administered to 147 Moroccan SMEs between January and April 2026 (138 complete responses). A Friedman test compared regulatory, operational, and behavioural barriers; a typology validated by Spearman correlation identified latent demand; an ordinal logistic regression tested individual determinants of usage intention across fifteen variables. Contrary to the regulatory hypothesis, behavioural (M = 4.25) and operational (M = 4.08) barriers dominate the regulatory one (M = 2.69; χ²(2) = 186.11, p < .001). A latent-demand segment, combining strong usage intention with low instrument awareness, accounts for 58.2% of the sample, the two dimensions being statistically independent (ρ = -.030, p = .72). Among fifteen predictors, only religiously motivated avoidance of conventional credit significantly predicts usage intention (β = 0.875, p < .001). These findings indicate that non-deployment stems mainly from demand-side informational and behavioural factors rather than the regulatory environment, with direct implications for financial-inclusion policy and participatory-bank product strategy.