The impact of institutional quality and shadow economy on entrepreneurship
Published: July 31, 2026
Abstract
This study assesses the moderation role of institution towards the impact of shadow economy on the spirit of entrepreneurs. The study’s data is collected from the Global Entrepreneurship Monitor (GEM), the World Bank, andthe International Monetary Fund (IMF), covering 190 countries in the period of 2009 - 2018. By using the Fixed Effects (FE) and the System Generalized Methods of Moments (SGMM), the study finds out that (1) the shadow economy discourages a country’s motivation to start up, (2) the improvement of institutional quality promotes the entrepreneurial spirit, and (3) a good institutional quality mitigates the negative effect of the shadow economy on the entrepreneurial spirit.
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