The Role of Financial Development on Private Entrepreneurship in Cameroon

Abstract

The paper analyses the effect of financial development on private entrepreneurship in Cameroon measured by private capital formation. The data was obtained from the World Development Indicators data base and were analyzed using a two stage least square regression technique. The results showed that both elements of financial development (domestic credit and savings mobilization) positively and significantly influence private entrepreneurship in Cameroon. Also, household domestic demand for goods and services had a positive effect on private entrepreneurship. From a policy perspective, an important conclusion is that an effective way for private entrepreneurship to be promoted in Cameroon is by improving on access to finance and increasing incomes that will eventually produce mutually reinforcing effects that increase savings and demand.

Keywords: financial development, private entrepreneurship, two stage least squares, Cameroon

JEL. Classification: B30, B53, C11, C23, O10, O40