The impact of regulatory quality on business venturing: A semi-parametric approach

Michael Polemis () and Thanasis Stengos

Economic Analysis and Policy, 2020, vol. 67, issue C, 29-36

Abstract: We study the effects of regulatory quality on entrepreneurial activity in 30 OECD countries through the lens of a partially linear panel data model. We argue that there is a nonmonotonic “inverted-U shaped” curve between regulatory quality and total early-stage entrepreneurship activity lending support to the theory of pubic choice. Moreover, the empirical findings postulate that a deterioration in the effectiveness and enforcement of government regulations (i.e., government inability to formulate and implement sound policies, onerous regulation, etc.) harm setting up a business activity within the OECD countries. Our findings survive robustness checks under different dimensions of entrepreneurship (nascent, new and established entrepreneurs) and endogeneity bias. Lastly, these results have important implications for policy makers and government officials in promoting effective regulatory measures to enhance entrepreneurial activity.

Keywords: Entrepreneurship; Regulation; Nonlinearities; Institutions; OECD (search for similar items in EconPapers)
JEL-codes: C14 D02 L26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:67:y:2020:i:c:p:29-36

DOI: 10.1016/j.eap.2020.05.005

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