The entrepreneurial ecosystem of inclusive finance and entrepreneurship: A theoretical and empirical test in China

Guo‐Hua Cao and Jing Zhang

International Journal of Finance & Economics, 2022, vol. 27, issue 1, 1547-1568

Abstract: From a regional entrepreneurial ecosystem perspective, we theoretically interpret and empirically testify the mutual promotions between inclusive finance, entrepreneurship, and development. To do so, a two‐period overlapping generation model is introduced to interpret the mechanism, and then a panel vector auto‐regression model based on 31 provinces (and municipalities) in China from 2005 to 2016 is constructed. We find that: (a) Due to the development‐promoting ability, self‐reinforcing ability and multiplying effect, it is possible and worthy to construct a sustainable developing system. (b) However, an insufficient human capital endowment might be a critical obstacle, which is revealed as a precondition of this sustainable system. (c) Moreover, it is necessary to promote sustainable development of financial inclusion and entrepreneurship, due to the lack of directly promoting effect from economic development. (d) Thus, governmental complement is indispensable because of polarization led by the endowed wealth gap, and continuous promotion is appealed due to the transforming lag of mutual promoting feedback.

Date: 2022
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