Bank Financing in Moroccan Family-Owned SMEs: Perceptions and Determinants

Abstract

This article offers an in-depth analysis of the debt-financing behavior of Moroccan family-owned small and medium-sized enterprises (SMEs), focusing on the perceptions, attitudes, and strategic choices of their leaders when considering bank borrowing. The primary goal is to identify not only the factors that encourage these firms to take on debt but also the barriers that discourage them from using bank credit.

To address this objective, the study adopts an exploratory qualitative approach based on semi-structured interviews conducted with a selected sample of 9 family-owned SMEs located in the Marrakech–Safi region. This method provides rich, context-sensitive data and makes it possible to capture the decision-making logic of these businesses beyond what purely quantitative financial indicators can reveal.

The findings of the thematic analysis show that the financial behavior of Moroccan family SMEs aligns closely with the predictions of the Pecking-Order Theory of capital structure. In practice, these companies strongly prefer internal financing through retained earnings as their first option. When additional resources are required, they turn next to debt financing, while deliberately avoiding opening their equity to outside investors in order to maintain both ownership control and the family’s influence over strategic decisions.

Furthermore, the study highlights that their financing decisions are shaped by a combination of economic and non-economic considerations. Economic factors include the cost of credit, collateral requirements, and repayment capacity. Equally important are non-economic drivers such as risk aversion, concern for preserving family reputation, adherence to religious norms, and a deliberate commitment to retaining strong family control over the business.

Overall, this research provides valuable insights into the financial and socio-emotional determinants of debt decisions in Moroccan family-owned SMEs. By uncovering the interplay between economic constraints and family-centered values, it contributes to a deeper understanding of how these enterprises construct their financing strategies and manage their long-term growth while safeguarding family legacy and authority.

Classification JEL: M10 – G32

Paper type: Empirical Research