Trustworthiness and margins in Islamic small business financing: Evidence from Indonesia

The existing literature has shown that, in the context of conventional bank lending to small businesses, trust reduces interest rates. However, not discussed role supporting financing decisions, that is, margin charged business managers at Islamic banks. We select murabaha, most popular product offered by banks, and examine reducing margins for murabaha. surveyed asked them about perceived benevolence (habitualization) integrity (institutionalization) with whom they are dealing. found is negatively associated businesses. Our results robust endogeneity.