Abstract

Background: Studies showed that the development of conventional financial system has mixed results in motivating growth and businesses. Matters of finance greatly explain how entrepreneurs handle the risks and leverage. Corresponding to this, Islamic financial inclusion is the right, participative, and equitable alternative for new ventures in an Islamic economic system. Aim: This study is exploring the holistic quadratic financial market development effect on entrepreneurship at the macroeconomic level and assesses the contrast of patterns because of the increase in the share of Islamic equity financing as a risk-sharing instrument. Method: An unbalanced panel data is acquired for selected Islamic banks of 21 nations to estimate Panel Quantile Regression (PQR) measuring the curvilinear financial market development effect and moderating role of Islamic equity financing in explaining the macroeconomic entrepreneurship index. Results: The results show that higher equity financing dissipates the debt burden of financing by sharing risks, thus motivating entrepreneurship at a macroeconomic level. Implications: Central Banks and Islamic advisory boards regulating banking systems innovate to integrate and increase equity based financial instruments as a financial inclusion policy in promoting a risk-sharing entrepreneurial ecosystem. KAUJIE Classification: C23, E44, E59, L26 JEL Classification: O3, Q91

Keywords

Moderator Model, Islamic Financial Inclusion Panel Robust Regression