Financial Openness, Institutional Quality and Entrepreneurship: A Comparison of Developed and Developing Countries

Zadmirzaee, Sediqeh; Adabi Firouzjaee, Bagher; Karshenasan, Ali

doi:10.30465/jnet.2026.54597.2290

Financial Openness, Institutional Quality and Entrepreneurship: A Comparison of Developed and Developing Countries

Document Type : Research Paper

Authors

Sediqeh Zadmirzaee ¹

bagher adabi firouzjaee ²

ali karshenasan ³

¹ MSC of entrepreneurship management, Department of Administrative Sciences and Economics, Faculty of Humanities and physical education, Gonbad Kavous University, Gonbad Kavous, Iran

² Assistant Professor of Gonbad Kavous University

³ Assistant Professor of Economics, Department of Administrative Sciences and Economics, Faculty of Humanities and physical education, Gonbad Kavous University, Gonbad Kavous, Iran

10.30465/jnet.2026.54597.2290

Abstract

this study aims to explore how the degree of financial openness affects entrepreneurship, with an emphasis on the role of governance indicators for two groups of selected developed and developing countries, based on a dynamic panel data model (GMM) for the period 2006–2022. The results show that: First, while the impact of financial openness on entrepreneurship is positive and significant for developed countries, this effect is negative for developing countries. Second, the six governance indicators have a positive and significant effect on entrepreneurship in both country groups, although the magnitude of significance is greater in developed countries. The main finding of the study is that, in developing countries, even though financial openness has a negative impact on entrepreneurship, its interaction effect with the governance index on entrepreneurship is positive and significant. This highlights an important point that developing countries can enhance their financial absorption capacity by improving components of the governance index—such as political stability, corruption control, government effectiveness, rules and regulations, regulatory quality, and accountability. It is caused these developing countries benefit from the positive advantages of financial openness,..

Keywords

entrepreneurship

Financial Openness

governace index

developed and developing counytries

GMM- approch