Abstract
The paper explores the association between financial development and venture capital fundraising, and how that relationship varies with institutional quality. We analyze a dataset of thirty-one countries between 2005 and 2017 using a dynamic two-step system generalized method of moments (GMM) estimation technique. We find that financial development and its two components, namely financial markets, and financial institutions, exert a significant positive effect on venture capital fundraising. However, the relationship shifts with institutional quality, with positive and large effects in countries with robust legal frameworks but not in those with weak legal frameworks. The results are robust to the use of different data sources and proxies for institutional quality, as well as estimation techniques.
| Original language | English |
|---|---|
| Pages (from-to) | 379-413 |
| Number of pages | 35 |
| Journal | Journal of Industrial and Business Economics |
| Volume | 52 |
| Issue number | 2 |
| DOIs | |
| State | Published - Jun 2025 |
Bibliographical note
Publisher Copyright:© The Author(s) under exclusive licence to Associazione Amici di Economia e Politica Industriale 2024.
Keywords
- Financial development
- Financial institutions
- Financial markets
- Formal institutions
- Venture capital
ASJC Scopus subject areas
- Business and International Management
- General Business, Management and Accounting
- Economics and Econometrics
- General Economics, Econometrics and Finance