HOW DOES FINANCIAL INCLUSION IMPACT ENTREPRENEURSHIP IN DEVELOPING COUNTRIES?

This paper aims to investigate the relationship between financial inclusion and entrepreneurship in a developing country such as Albania. Entrepreneurial activity is one of the key drivers of economic development, a catalyst of innovation and new job creation, especially in developing countries. On the other hand, financial inclusion has received a lot of attention in recent years, and it is included in every government's agenda, aiming to build inclusive financial systems. The financial system generally impacts the level of entrepreneurship; however, there is a gap in assessing the relationship between financial inclusion and entrepreneurship. This study employs a multiple regression analysis with secondary data for 14 years (2010 – 2023). The business growth rate is used as an indicator to express the entrepreneurial activity (dependent variable), and commercial bank branches (per 100,000 adults) are used as a proxy to express financial inclusion (independent variable). To increase the model's accuracy, several control variables have been included: regulatory quality, domestic financing, and GDP growth rate. The output of the regression analysis supports the positive relationship between financial inclusion and entrepreneurship growth in Albania. Meanwhile, regulatory quality and domestic financing negatively affect entrepreneurial activity, and GDP has no statistically significant effect.