Does stock market liberalization promote entrepreneurship?

Chun Jiang, Yihan Qiu, Xiao-Lin Li and Deng-Kui Si

Economic Analysis and Policy, 2024, vol. 83, issue C, 480-495

Abstract: This paper investigates the impact of stock market liberalization on entrepreneurship using non-financial firm-level data from 2007 to 2022. The results show that increased stock market liberalization promotes entrepreneurship by alleviating financial constraints, reducing corporate risk-taking, and enhancing corporate social responsibility. With a one percent increase in stock market liberalization, entrepreneurship improves by 8.60 percent. These findings remain robust even after replacing variables, changing model specifications, and addressing the endogeneity concerns. We also find the positive impact of stock market liberalization on entrepreneurship is more pronounced for firms with higher financing constraints, governance efficiency, industry competition, and eastern regions. This study underscores the significance of thoughtful financial market reforms in promoting entrepreneurship and ensuring high-quality economic development.

Keywords: Stock market liberalization; Entrepreneurship; Financing constraints; Corporate risk-taking; Corporate social responsibility (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:83:y:2024:i:c:p:480-495

DOI: 10.1016/j.eap.2024.06.027

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