Anti-Money Laundering Regulations and Entrepreneurship

Abstract

The implications of money laundering activities in developing economies have yielded mixed findings. However, existing studies have not specifically examined the role of anti-money laundering (AML) regulations in relation to entrepreneurial development. This study aims to fill this gap by analyzing the impact of AML regulations on entrepreneurship in Africa. The analysis utilizes data from 21 African nations for 2012-2018. The empirical analysis employs panel-corrected standard errors (PCSEs) and instrumental variable (IV) regression. The results demonstrate a significant positive impact of AML regulations on entrepreneurship. It is also revealed that AML regulations bolster institutional quality, thereby fostering entrepreneurship. Moreover, the study finds that AML measures facilitate financial development, further promoting entrepreneurial growth in Africa. Importantly, these results remain robust even after conducting a thorough robustness check. Consequently, the study advocates for the implementation of effective AML regulations to enhance the African business environment.