Entrepreneurial finance and risk mitigation in Islamic and conventional banks: evidence from Pakistan

Abstract

This study was carried out to explore the effects of entrepreneurial finance, market risk management (MRM), credit risk management (CRM) and operational risk management (ORM) on risk mitigation in the conventional and Islamic banks of Pakistan. In addition to this, the moderating role of entrepreneurial finance was also examined. By using the cluster sampling technique, 500 questionnaires were distributed among the employees of conventional and Islamic banks. Data were analysed through Partial Least Square (PLS). It is found that MRM, CRM, and ORM have significant positive relationships with risk mitigation. Focus on market risk, credit risk, and ORM effects positively on overall risk mitigation. Furthermore, entrepreneurial finance strengthens the positive relationship between MRM and risk mitigation. This study has valuable insights for bank professionals and practitioners to mitigate the risk.