Effect of financial stability on new business establishments in Africa: does ease of doing business matter?
Journal of Financial Economic Policy
ISSN: 1757-6385
Article publication date: 29 November 2023
Issue publication date: 22 February 2024
Abstract
Purpose
Given the relevance of entrepreneurship in nation-building, studies geared towards the promotion of new businesses are crucial. This study aims to contribute to the finance and entrepreneurship literature by providing empirical evidence on the role ease of doing business plays in promoting new business establishments amidst financial stability.
Design/methodology/approach
The study used the fixed and random effect estimation techniques as well as the impulse response function to analyse annual panel data covering 53 African countries.
Findings
The results indicate that regulatory quality and access to electricity promote new business establishments. Also, to experience the direct effect of financial stability on new business establishments or entrepreneurship in Africa, the role of the ease of doing business cannot be isolated. The policy implication is that the creation of an enabling business environment is crucial for new business establishments.
Research limitations/implications
The sample only includes countries in Africa. Future or further studies may want to expand the sample size and also consider a comparative analysis where this analysis will be done plus another region so that the differences in findings can be known.
Originality/value
To the best of the authors’ knowledge, this is the first study to investigate the role of ease of doing business on new business establishments in the presence of financial stability in Africa.
Keywords
Acknowledgements
Funding Information: No funding was provided for the study.
Declaration of Interest: None.
Citation
Kulu, E., Sebu, J. and Osei, B. (2024), "Effect of financial stability on new business establishments in Africa: does ease of doing business matter?", Journal of Financial Economic Policy, Vol. 16 No. 2, pp. 205-225. https://doi.org/10.1108/JFEP-07-2023-0202
Publisher
:Emerald Publishing Limited
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