FINANCIAL INTENSITY AND YOUTH ENTREPRENEURSHIP IN UZBEKISTAN: EVIDENCE FROM A TWO-WAY FIXED-EFFECTS REGIONAL PANEL MODEL

The relationship between financial intensity and youth entrepreneurship in Uzbekistan is examined using regional panel data covering 14 regions over the 2020–2025 period. Because complete official regional data on youth entrepreneurship were unavailable, regional estimates were constructed using a calibration procedure and reconciled with official national totals. Youth entrepreneurship intensity was measured as the estimated number of self-employed individuals and individual entrepreneurs aged 15–29 per 10,000 young people. A two-way fixed-effects panel model was estimated for 2021–2025, with explanatory variables lagged by one year and internet coverage, unemployment, and higher-education student density included as control variables. The results indicate a negative association between lagged general financial intensity and subsequent youth entrepreneurship intensity (coefficient = −0.116686; p = 0.004). In the log-log specification, a 10% increase in financial intensity is associated with an approximately 1.1% lower level of youth entrepreneurship intensity in the following year. Higher-education student density is positively associated with youth entrepreneurship (coefficient = 0.564796; p = 0.004), whereas internet coverage and unemployment are not statistically significant. The negative sign of the financial intensity coefficient remains stable across alternative specifications and in 99.4% of 500 Monte Carlo replications. However, when uncertainty arising from the calibration procedure and regression estimation is combined using Rubin's rules, the coefficient remains negative but becomes statistically insignificant (−0.117622; p = 0.150). A separate cross-sectional analysis of targeted youth credit in 2019 reveals a positive but statistically insignificant association with subsequent growth in youth entrepreneurship (coefficient = 0.466245; p = 0.178). The findings suggest that general investment financing and targeted youth credit may influence youth entrepreneurship through different mechanisms, while the higher-education environment is positively associated with youth entrepreneurial activity. Nevertheless, the relationship with financial intensity should be interpreted cautiously because of the uncertainty inherent in the calibrated regional estimates.