02.05.2024 New Publication: "Islam and entrepreneurship: The role of Islamic banking"

Foto: Colourbox.de

A new study by Mohammad Reza Farzanegan and Ahmed Badreldin provides new empirical evidence for the relationship between Islam and entrepreneurship.

While some studies suggest that Islam discourages entrepreneurship, our research shows empirically that this only applies in the absence of Shariah-compliant access to finance. Using a multivariate regression analysis of 69 countries, we support that the presence of Islam as a state religion does indeed have a negative effect on entrepreneurship. However, this effect disappears in the presence of Islamic finance. The existence of Islamic banking is necessary to generate a positive impact by Islam as a state religion, reflecting the presence of religious influences on policymaking institutions on new business formation. However, in the absence of Islam as a state religion, (i.e., the absence of religiously motivated policies) Islamic banking is unable to compete with conventional banking and generates a negative impact on new business formation.