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

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

Abstract:
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.

• Link to the study