2. Financial Intermediation, Development, and Access to Finance in an Islamic Environment

Micro survey data from 36,135 firms in 41 Islamic countries are used to address two questions: first, what are the firm-specific and country-level predictors of financing constraints of firms and, second, whether there are differences between low- and high-income Islamic countries. The firm-specific characteristics are shown to predict financing constraints of firms. Differences are documented between low- and high-income Islamic countries. Firm age, size, sector of activity, export and ownership status of firms appear to be robust predictors of access to finance in low-income countries, whereas only a few of these determinants are found to be significant in high-income Islamic countries. Finally, country-level indicators that measure economic development, income distribution, and financial infrastructure also affect the role of firm-specific characteristics on financial constraints.