Greasing The Wheels Of Entrepreneurship? The Impact Of Regulations And Corruption On Firm Entry

The paper investigates whether the impact of regulations on entrepreneurship depends on corruption. The authors first test whether regulations robustly deter firm entry into the markets. The results show that some regulations are indeed important determinants of entrepreneurial activity. Specifically, more procedures required to start a business and larger minimum capital requirements are detrimental to entrepreneurship. Second, they test whether corruption reduces the negative impact of regulations on entrepreneurship in highly regulated economies. The empirical analysis for a maximum of 43 countries over the period 2003-2005 shows that corruption is beneficial in highly regulated economies.