Public entrepreneurship as a method of public intervention in participation finance and a new model proposal

The need for individuals and institutions to access finance necessitated the establishment of financial systems. In the financial system, there are two types of financing models, namely debt-based system and equity-based system. The traditional understanding of finance is mostly based on the debt system, and it is also among the main reasons why the system produces a continuous crisis. The structure of the participation finance approach that encourages partnership financing provides an important solution for the economic system to produce a continuous crisis. Although current participation finance practices are more like a debt-based system, the message at the core of participation finance points to the equity-based system. However, when the current participation finance practices are examined, it is seen that the "copy-paste" approach cannot be moved beyond and the focus is on form rather than substance. Therefore, in this study, the determinations regarding this imitative structure will be presented considering the market failures in the banking, insurance and capital markets, which are the three main pillars of the finance theory. Subsequently, a model based on equity-based system instead of debt-based system will be proposed, which breaks the correlation between interest and profit share and where profit share is used as a benchmark measure of commercial profit instead of interest. The operability and practicality of this model requires government regulation and support. The state will be the basis of the system to be established. Therefore, the proposed system will have to adopt the principles of public economy and be based on public entrepreneurship, one of the public intervention methods.