Quality adjusted financial development and the Entrepreneurship-Growth Nexus
Hazwan Haini and
Ly Slesman
Applied Economics Letters, 2025, vol. 32, issue 13, 1951-1955
Abstract:
The relationship between new business formation and economic growth can be supported by financial development. However, we argue that not all finance can spur entrepreneurial activity and that the quality of finance matters. Using data from 78 economies from 2006 to 2020, we estimate a dynamic growth model that accounts for potential endogeneity and simultaneity issues and an interaction term that captures the dynamic effects between entrepreneurial creation and quality-adjusted financial measures. We find some evidence that quality-adjusted measures of private credit that accounts for volatility and liquidity can moderate the relationship between entrepreneurship and economic growth. However, we also find that higher levels of quality-adjusted finance can crowd out the growth effects of new business formation, in line with the ‘too much finance’ view. Policy implications are discussed.
Date: 2025
References: Add references at CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2024.2331674 (text/html)
Access to full text is restricted to subscribers.
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:taf:apeclt:v:32:y:2025:i:13:p:1951-1955
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20
DOI: 10.1080/13504851.2024.2331674
Access Statistics for this article
Applied Economics Letters is currently edited by Anita Phillips
More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().