Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273880 
Year of Publication: 
2022
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 42-2022
Publisher: 
Philipps-University Marburg, School of Business and Economics, Marburg
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.
Subjects: 
Islam
Entrepreneurship
Islamic Finance
Islamic Banking
Financial development
NewBusiness Formation
Shariah
Document Type: 
Working Paper

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