The interplay of institutional quality and financial development in venture capital fundraising

Muhammad Zubair Khan (), Walter Ferrier (), Zafir Ullah Khan () and Affan Hameed ()
Additional contact information
Muhammad Zubair Khan: University of Science and Technology Bannu
Walter Ferrier: University of Kentucky
Zafir Ullah Khan: University of Science and Technology Bannu
Affan Hameed: University of Arts London

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2025, vol. 52, issue 2, No 6, 379-413

Abstract: Abstract The paper explores the association between financial development and venture capital fundraising, and how that relationship varies with institutional quality. We analyze a dataset of thirty-one countries between 2005 and 2017 using a dynamic two-step system generalized method of moments (GMM) estimation technique. We find that financial development and its two components, namely financial markets, and financial institutions, exert a significant positive effect on venture capital fundraising. However, the relationship shifts with institutional quality, with positive and large effects in countries with robust legal frameworks but not in those with weak legal frameworks. The results are robust to the use of different data sources and proxies for institutional quality, as well as estimation techniques.

Keywords: Venture capital; Formal institutions; Financial development; Financial markets; Financial institutions (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s40812-024-00333-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:epolin:v:52:y:2025:i:2:d:10.1007_s40812-024-00333-0

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40812

DOI: 10.1007/s40812-024-00333-0

Access Statistics for this article

Economia e Politica Industriale: Journal of Industrial and Business Economics is currently edited by C. Cambini, M.G. Colombo, L. Piscitello, L. Rondi and A. Zanfei

More articles in Economia e Politica Industriale: Journal of Industrial and Business Economics from Springer, Associazione Amici di Economia e Politica Industriale
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().