Meta-analysis of factors shaping risk management and adoption of equity-based financing in Islamic banking

Equity-based financing lies at the heart of Islamic banking’s ethical promise, yet its real-world adoption remains limited. This study brings together findings from 47 empirical studies and 129 correlations to explore what drives or hinders stakeholder engagement with contracts like Mushārakah and Mudarabah. Through meta-analysis, three consistent predictors emerge: risk perception, regulatory support, and institutional trust. Risk perception shows an evident negative influence, especially in developing economies where institutional safeguards are weaker. In contrast, strong regulatory frameworks and trust in financial institutions play enabling roles, encouraging adoption across diverse contexts. Moderator analysis reveals that economic context significantly shapes how risk is perceived, while contract type does not appear to alter adoption patterns. Robustness checks, including sensitivity analysis and Fail-Safe Number tests, confirm the reliability of these findings. Taken together, the results offer both theoretical clarity and practical direction, highlighting the need for stronger governance, transparent communication, and trust-building strategies to unlock the full potential of equity-based finance in Islamic banking. Future research should explore cultural and behavioural dimensions and track how adoption evolves as institutions mature.