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ROLE OF ISLAMIC FINANCE ON THE DEVELOPMENT OF MICRO SMALL AND MEDIUM ENTERPRISES (MSMEs) IN GOMBE STATE, NIGERIA

Year: 2026

Type: article

Abstract: Micro, Small and Medium Size Enterprises (MSMEs) play crucial role in economic growth, employment generation, and poverty reduction in Nigeria. MSMEs in Gombe State are confronted by several challenges which include high interest rates, collateral requirements, and limited institutional support. This paper conceptually examineds the role of Islamic finance in bridging the MSMEs access gap to finance to aid their development. The paper is underpinned by theories of Resource-Based View (RBV) and Institutional theory, where RBV explains Islamic financial instruments such as Murabaha, Mudarabah, and Musharakah as strategic resources, while Institutional theory explain the cultural legitimacy and trust of Islamic finance in the socio-economic of Gombe State. Islamic finance offers immense potential for enhancing financial inclusion, guiding trust-based financial relationships, and inclusive economic development. By prohibiting interest and placing risk sharing as the core principle, Islamic finance offers ethical and sustainable financing alternatives to MSMEs. But it faces structural barriers, weak regulatory frameworks, and limited level of awareness that hamper its effectiveness. This study emphasizes that regulatory and institutional reforms are required in strengthening the Shariah compliant frameworks establishing Islamic microfinance institutions, and integrating Islamic finance into state level MSMEs policy and strategies. Such reforms would create better access to affordable capital for MSMEs, build resilience, and contribute toward sustainable economic transformation in Gombe State, Nigeria. KEYWORDS: MSMEs, Islamic Finance, Shariah Principle, Financial Inclusion, Regulatory Reform

Source: International Journal of Business Management Behavioral Research and Innovations

DOI: 10.66837/ijbmbri01/33/306

Authors: Abubakar Isyaku, Zakariyau Gurama

Institution: Gombe State University

Language: English

Topic: Islamic Finance and Banking Studies

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Peace, justice, and strong institutions

Open Access status: bronze

OpenAlex ID: W7204279584