Entrepreneurship and human capital: The role of financial development

The previous literature is filled with mixed findings with regard to human capital's impact on entrepreneurial outcomes. Using data from Global Entrepreneurship Monitor, we re-explore the human capital-entrepreneurship relationship and attempt to clarify the mixed findings. In particular, the prior literature has treated human capital's impact on entrepreneurship in isolation, while in reality its impact depends on access to financial capital. Our results show that a rise in tertiary enrollment benefits entrepreneurship most when the level of financial development is low. For higher levels of financial development, the impact of tertiary enrollment on entrepreneurship is still positive but much lesser in magnitude compared to countries with lower level of financial development.