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Sustainability 2017, 9(2), 203; doi:10.3390/su9020203

Financial Inclusion, Entry Barriers, and Entrepreneurship: Evidence from China

Department of International Business, International Business School, Jinan University, Zhuhai 519070, China
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Received: 10 January 2017 / Accepted: 25 January 2017 / Published: 1 February 2017
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Abstract

This paper aims at investigating the relationship between financial inclusion and the formation of entrepreneurs, both theoretically and empirically. We first construct a theoretical model to examine how the development of financial inclusion affects the formation of entrepreneurs. The model suggests that the development of financial inclusion can mitigate credit constraints on entrepreneurial activities by reducing information asymmetry in financial transactions, and in addition this effect is greater in industries with lower barriers to entry. Then, using data from 31 provinces and 19 industries in China during the period 2005–2014, we test the impact of financial inclusion on the formation of entrepreneurs. The estimation results confirm the positive effect of financial inclusion development on the formation of entrepreneurs, and indicate that this effect is heterogeneous across industries. Moreover, the development of financial inclusion is often beneficial to the formations of entrepreneurs in sectors with lower entry barriers. View Full-Text
Keywords: financial inclusion; entry barriers; entrepreneurship; China financial inclusion; entry barriers; entrepreneurship; China
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Fan, Z.; Zhang, R. Financial Inclusion, Entry Barriers, and Entrepreneurship: Evidence from China. Sustainability 2017, 9, 203.

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