COMPARATIVE ANALYSIS BETWEEN ISLAMIC FINANCE AND VENTURE CAPITAL: DO IFIS AND VENTURE CAPITALISTS ADOPT THE SAME INVESTMENT DECISION PROCESS?

This paper proposes, to compare two modes of financing namely: venture capital and certain practices of Islamic finance (Musharakah and Mudarabah). In this comparison, we will focus on the decision-making process to invest in a risky project and following the results found, we will evoke the notion of bounded rationality through its reliability models, with the aims of questioning the applicability thereof in the field of Islamic finance. The analysis carried out shows that these two modes are very similar, particularly in their approach to investment and their conception of partnership in business. Despite the undeniable advantages of the Musharakah and Mudarabah modes of financing, we noticed that these practices are rarely used the Islamic financial institutions because of the difficulties encountered by financial operators during the application of funds granting procedures. Also, this study shows that the modeling of decision-making process in participatory finance is a necessity and this will be the subject of our next paper.