Concentration and Diversification Challenges in Moroccan Participatory Banking: An Empirical Analysis Using Bank Al-Maghrib Data

Abstract

Research on participatory finance in Morocco addresses governance, innovation, and SME financing, but provides less evidence on the concentration of financing by economic purpose using synthetic indicators that distinguish growth in outstanding financing from diversification in its allocation. This article provides a descriptive and exploratory empirical analysis based mainly on public Bank Al-Maghrib reports. At year-end 2024, outstanding participatory financing reached MAD 33.8 billion, up 19.9% year on year. Real estate accounted for 78.7% of outstanding financing, equipment for 15.4%, and consumption and treasury financing for 5.9%. The HHI calculated across these three categories was 0.6466, or 6,466 on a 0–10,000 scale, equivalent to about 1.55 effective categories. Shannon entropy was 0.6436, corresponding to about 1.90 effective categories. Both indicators describe an uneven allocation dominated by real estate. The indicative comparison for 2022–2024 shows a decline in the HHI from 0.7045 to 0.6466, but this change should be interpreted cautiously because the published data differ in precision and the categories remain aggregated. Mourabaha also represents 99% of participatory financing; however, this figure belongs to a contractual-instrument classification that is distinct from the breakdown by economic purpose. The study does not directly measure SME financing shares, identify the determinants of concentration, or establish causal relationships. It relies on one main institutional source, three aggregated categories, and a detailed analysis of 2024. The HHI is used as a descriptive indicator rather than a regulatory threshold, an optimal portfolio structure, or a performance measure. The main operational recommendation is to publish stable and comparable annual breakdowns by economic purpose and contractual instrument, subject to confidentiality requirements, so that diversification can be monitored more robustly over time.

JEL Classification: G21, G23, G28
Paper type: Exploratory and descriptive empirical study