Does Equity Finance Improve Entrepreneurship Potency of Financial Sector Development?

Abstract

Purpose: 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