Unable to create new shapefile, permission is denied

Error Message

In ArcMap, attempting to create a shapefile from the Catalog tree returns the following error message:

Error:   
Unable to create new shapefile, permission is denied.

The error message is also returned when attempting to save the shapefile in a system folder such as Windows, Program Files, and Program Files (x86).

Cause

The following are probable causes:

• The shapefile name contains characters such as the forward slash (/), backward slash (\), bar (|), and asterisk (*), which are not supported in ArcGIS Desktop.
• The user is unable save the shapefile in the folder location due to insufficient permissions to read or write in the system folder.

Solution or Workaround

Depending on the cause, select one of the options below to resolve the issue:

• Remove the special characters and rename the shapefile according to the correct format. Refer to ArcMap: Name restrictions based on characters for more information.
• Ensure sufficient privileges are granted. The Read-Write permissions on the folder are required to create a shapefile. Refer to Microsoft: "Access Denied" or other errors when you access or work with files and folders in Windows for more information.