The interactive effect of institutional quality and financing on entrepreneurship development in selected MENA countries

Abstract

Entrepreneurship is the driving force of economic activities that need financing. Institutional quality and financing have always been serious issues for entrepreneurs to start a business and develop entrepreneurship. This study investigates the interactive effect of institutional quality and access to credit on entrepreneurship development in selected MENA countries during 2005-2019. The research method is descriptive and the data are obtained from the Global Entrepreneurship Watch Institute, the World Database and UNESCO, and the panel data approach has been used to estimate the models. Diagnostic tests as well as F-Limer and Hausman tests have been performed to choose between least squares (LS), fixed effects or random effects methods. The results show that the interaction between institutional quality and sources of credit has a positive and significant effect on entrepreneurship development. Therefore, the development of institutional quality reform can affect the development of entrepreneurship.