THE ROLE OF ISLAMIC FINANCE IN PROMOTING ENTREPRENEURSHIP AND ECONOMIC GROWTH

Abstract

This study uses the endogenous growth model to analyze how Islamic finance can spur economic expansion and entrepreneurship. It draws attention to the historical forces behind global economic expansion highlighting the shift from established forces to emerging markets especially the emergence of the BRICS economies. The endogenous growth model is examined as a theoretical underpinning because of its emphasis on internal elements like innovation investment and human capital. In order to show how mechanisms like risk-sharing ethical investing and financial inclusivity support sustainable development the paper incorporates Islamic financial principles into this model. Particularly in the economies of the Middle East and Southeast Asia empirical research shows that Islamic finance has a positive effect on capital accumulation and entrepreneurship. While tackling issues of inequality and financial exclusion tools like equity-based financing and Sukuk (Islamic bonds) encourage moral and sustainable growth. The conversation emphasizes how Islamic teachings which support just wealth distribution moral behavior and social solidarity are consistent with international economic goals. Policy suggestions to improve the incorporation of Islamic finance into international economic systems are included in the papers conclusion. These include investing in human capital establishing public-private partnerships bolstering regulatory frameworks advancing financial inclusion fostering innovation and integrating Islamic finance into national development plans. Islamic finance can significantly contribute to the promotion of equitable moral and sustainable economic growth by implementing these policies.