Exploring Institutional Determinants of Private Equity and Venture Capital Activity in Europe
Geršl, Adam; Jandric, Aleksandra
Year: 2025 Volume: 75 Issue: 4 Pages: 400-422
Abstract: This paper examines the determinants of private equity activity across Europe. We analyze a total of 43 explanatory variables, categorized into six groups: Economy, Finance and capital markets, Quality of institutions, Life quality, Economic freedom and Globalization. We assess their impact on three target variables representing overall private equity activity: Investments, Divestments and Fundraising. The study covers 26 European countries over the period from 2007 to 2022. Using Bayesian Model Averaging and panel data analysis, we identified the key variables that countries should prioritize to stimulate private equity activity and enhance sector attractiveness through strategic policy adjustments. Our findings, robust across multiple specifications and priors, underscore the importance of treating private equity as a stage-specific process, in which investments, divestments and fundraising are shaped by distinct economic, financial and institutional factors.
JEL classification: G11, G24, G28, M13, O21
Keywords: private equity, venture capital, fundraising, investments, divestments, panel data analysis
DOI: https://doi.org/10.32065/CJEF.2025.04.02
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