Potential of Islamic banking: focus on the Tunisian market

What is it about?

The present paper aims to focus on social utility of Islamic banking system by taking as example the Tunisian Market. We studied the individuals' potential demand for Islamic financial products in different Tunisian regions. To do that, we conducted a national Survey based on Quota sampling method to select the number of interviewed by Governorate and by sex. We obtained then a sample which includes 1600 persons from different social categories with a minimum age of 18 years. The survey results show that this potential demand is significant but Tunisian Islamic Banks should work more to enlarge existing customer base. Indeed, they should take into consideration the level of Islamic Finance knowledge and the socio-demographic characteristics (such as Governorate, level of education and annual income) in order to ensure the social welfare. They should also supply Islamic microfinance products to ensure the inclusion of poorer agents. In addition, Islamic banks should provide competitive products and services at lower cost and higher quality that are really compliant with the Sharia principles to encourage entrepreneurs or richer agents to invest in profitable and innovative projects, especially in economically disadvantaged regions. This would strengthen accountable decentralization and fight income inequality in Tunisia.

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