Abstract: 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.
Abstract: This paper investigates the effects of reforms in different dimensions of the financial sector on corruption in a panel of 82 countries. It finds that several, but not all, of the policies targeted toward liberalizing financial sector reduce corruption. Specifically, entry barriers, directed credit, securities market development, and the extent of banking supervision are significantly negatively associated with corruption. The effects of reforms in different dimensions of the financial sector also depend on the quality of the governance (bad versus good governance) and whether the country is an advanced or a non‐advanced economy. Finally, a stronger democracy and better law and order are found to be associated with lower corruption.
Abstract: This paper assesses the impact of financial reforms on corruption using a panel of 87 countries for 1984-2005. To account for the dynamic nature and high persistence of corruption, the paper employs the difference and system generalized method of moments (GMM) estimators. It finds that policy reforms targeted towards financial liberalization reduce corruption. This result is robust to the inclusion of a number of control variables and the choice of the GMM estimator. Interestingly, the financial liberalization index is found to be positively correlated with corruption though this relationship is not robust. The findings also indicate that legal origins do not impose a binding constraint on the effectiveness of financial reforms in reducing corruption.