Work detail

The impact of economic freedom and finance accessibility on new firm formation

Author: Bc. Matyáš Mattanelli
Year: 2021 - summer
Leaders: Mgr. Jan Mareš, Ph.D.
Work type: Bachelors
Language: English
Pages: 79
Awards and prizes:
Abstract: This thesis investigates the effects of economic freedom and finance accessibility on new firm formation. The former is proxied by the Index of Economic
Freedom and its subindices published by The Heritage Foundation, while the
latter is represented by four characteristics of the country’s financial system retrieved from the World Bank’s Global Financial Development Database. The
dependent variable is proxied by the measure of new business density obtained
from the World Bank’s Entrepreneurship Survey and database. As a result,
the data set employed in this thesis is an unbalanced panel consisting of 136
countries observed between the years 2006 and 2017. Given the inclusion of
past realizations of the dependent variable, the models are estimated by the
dynamic panel estimator System GMM. The variables found to affect new firm
formation positively and with a statistical significance are economic freedom,
financial freedom, and rule of law. The last variable captures the degree of protection of property rights and the country’s level of corruption. On the other
hand, the findings suggest that countries with less stable banking sectors enjoy
greater new firm formation rates. No significant relationship has been found
between financial access and new firm formation.


Česká Spořitelna


Patria Finance