A comparative study of financing small and cottage industries by interest‐free banks in Turkey, Cyprus, Sudan and Bangladesh

Purpose The purpose of this paper is to demonstrate a comparative study of financing small and cottage industries (SCIs) by interest‐free banks in different countries like Turkey, Cyprus, Sudan and Bangladesh. Design/methodology/approach The objectives are achieved by analyzing data based on an “institutional network” theoretical frame of references. The methodological approach used in the research is of a qualitative nature. Findings The research result shows that the lender–borrower network relationship, especially in case of financing rural‐based SCIs by interest‐free banks, differ from one country to the other even though the basic principles of interest‐free financing remains the same. Originality/value The ideas of interest‐free financing system (IFS) and its specific mode of lending funds towards rural‐based SCIs. The research is useful to both financing organizations based on interest‐free principles also small and cottage industry owners in developing as well as developed nations, where the Shariah‐based IFS is working.