Do Financial Reforms Promote Entrepreneurship?

14 Pages Posted: 14 Nov 2020

Date Written: September 2020


This paper investigates whether financial reforms promote entrepreneurship. Using a panel of 41 developed and developing countries from around the world, we find that financial sector reforms are positively associated with early-stage entrepreneurial activity. In a variety of robustness checks, including a falsification test, we fail to find the evidence that this relationship is driven due to the omission of unobserved, country-specific factors. Investigating the relationship between reforms in different dimensions of the financial sector and entrepreneurship, we find reforms in directed credit, credit controls, banking supervision, and international capital flows dimensions to be significantly associated with early-stage entrepreneurial activity.

Keywords: Entrepreneurship, Banks, Financial Sector Reforms, Liberalization, Financial Sector Regulation

JEL Classification: L26, M13, G20

Suggested Citation

Jha, Chandan Kumar and Bhuyan, Rafiqul, Do Financial Reforms Promote Entrepreneurship? (September 2020). Finance Research Letters, Vol. 34, No. 101272, 2020, Available at SSRN: or

Chandan Kumar Jha (Contact Author)

Le Moyne College ( email )

Syracuse, NY 13214
United States

Rafiqul Bhuyan

Alabama A&M University ( email )

Huntsville, AL 35811
United States

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