| By: |
Mohammad Reza Farzanegan (Marburg University);
Ahmed M. Badreldin (Marburg University) |
| Abstract: |
Studies on the relationship between religion and Entrepreneurship suggest that
Islam discourages entrepreneurship. This is sometimes used to explain the
excessively high unemployment figures for Muslim majority countries. However,
we argue that studies that support this claim have missed a critical
moderating factor, namely the presence of Shariah-compliant financing through
Islamic banks. Using a multivariate regression analysis of 69 countries, our
research shows empirically that the negative effect of Islam on
entrepreneurship only applies in the absence of Shariah-compliant access to
finance. This negative effect disappears in the presence of Islamic banks,
thus disproving the generalized claim that Islam discourages entrepreneurship
and showing that Muslim majority countries with high unemployment would do
well to encourage the establishment of Shariah-complaint modes of financing to
allow inclusion of religious entrepreneurs who would otherwise be excluded
from the economy. |
| Keywords: |
Islam, Entrepreneurship, Islamic Finance, Islamic Banking, Financial development, New Business Formation, Shariah |
| Date: |
2022 |
| URL: |
http://d.repec.org/n?u=RePEc:mar:magkse:202242&r=isf |