The Effect of Financial Development on the Status of Entrepreneurship in Selected Countries

Financial resources, particularly at the early stages of entrepreneurship, play a crucial role, and the lack of these resources is recognized as a major obstacle for entrepreneurs. To address this issue, this study examines the impact of financial development on entrepreneurship in 44 developing and developed countries between 2008 and 2018. Private sector credit to GDP and market capitalization to GDP are considered independent variables, while perceptions of corruption, inflation rate, and per capita GDP serve as control variables. The findings of the six estimated models demonstrate the stability of the coefficients and models. The results reveal a positive correlation between private sector credit to GDP and the entrepreneurship index. Additionally, the second index of financial development exhibits a positive and significant relationship with the index of entrepreneurship. The coefficients of the corruption perception index are also positive for both models, indicating that reducing corruption can facilitate the process of entering into business.