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1
Lopez-Martin, Bernabe. "INFORMAL SECTOR MISALLOCATION." Macroeconomic Dynamics 23, no. 8 (2018): 3065–98. http://dx.doi.org/10.1017/s1365100517001055.
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A quantitative framework of firm dynamics is developed where the size of the informal sector is determined by financial constraints and the burden of taxation. Improving access to credit for formal sector firms increases aggregate total factor productivity and output while reducing the size of the informal sector. Introducing size-dependent taxes reduces the gains from financial development as they incentivize firms to produce at a relatively limited scale. The aggregate effects of eliminating formal sector registration costs are positive but modest relative to previous theoretical models and the gains generated by financial development, and consistent with empirical evidence based on micro-level data.
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D, Harish, R. Vennila, and Rajith Kumar H B. "The Role of Fintech and Its Influence on Transforming Retailers from Informal Financial Sector to Formal Financial Sector." International Journal of Research and Review 11, no. 7 (2024): 458–70. http://dx.doi.org/10.52403/ijrr.20240749.
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The rapid advancement of financial technology (fintech) is playing a pivotal role in transforming retailers from the informal financial sector to the formal financial sector. This paper explores the transformative role of financial technology (fintech) in promoting financial inclusion among retailers, particularly those operating within the informal financial sector. The study highlights key fintech innovations such as mobile payments, digital wallets, online banking, microfinancing platforms, Point-of-Sale (POS) systems, and digital bookkeeping. These technologies provide enhanced access to credit and financial services, improve transparency and record-keeping, reduce transaction costs, increase operational efficiency, and ensure compliance with regulatory requirements. The research emphasizes the significant impact of fintech on business operations and growth for retailers, fostering a shift from informal to formal financial sectors and contributing to long-term economic growth and stability. The study also identifies challenges and barriers to fintech adoption, including technological literacy, initial investment costs, regulatory compliance, and trust and security concerns. Policy recommendations include stronger government and regulatory support for fintech adoption, targeted financial literacy and education programs, incentives for informal retailers to transition to the formal sector, and the establishment of public-private partnerships to foster innovation. By addressing these challenges and implementing supportive policies, fintech can drive financial inclusion and economic development among retailers. Keywords: Fintech, Retailers, Financial Inclusion, Informal Financial Sector, Mobile Payments, Digital Wallets, Online Banking, Microfinancing Platforms, Point-of-Sale (POS) Systems, Digital Bookkeeping.
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Muhammed, Ismail. "THE IMPACT OF FINANCIAL DEVELOPMENT AND THE INFORMAL ECONOMY ON SUSTAINABLE DEVELOPMENT IN ASEAN." Journal of Central Banking Law and Institutions 4, no. 2 (2025): 227–58. https://doi.org/10.21098/jcli.v4i2.285.
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This study examines the interplay among the ASEAN region’s financial development, informal economy, and sustainable development. While financial development is expected to support economic growth, its relationship to sustainability remains ambiguous, particularly in economies with significant informal sectors. Using a panel dataset from 1991 to 2020 across 10 ASEAN countries, the study employs robust econometric techniques, including fixed effects, feasible general least squares methodology, and quantile regression, to assess the direct and indirect effects of financial development and informality on sustainability. Findings reveal that the informal economy positively contributes to sustainable development, likely by providing employment and economic opportunities. However, financial development, measured by a broad money supply and private sector credit, has a negative impact, suggesting that financial resources are not effectively allocated to sustainability-driven sectors. The interaction between financial development and informality further exacerbates sustainability challenges, indicating a misalignment between formal financial mechanisms and informal economic activities. These results highlight the need for policy strategies integrating informal sector dynamics into financial systems, ensuring financial growth translates into broader sustainable development outcomes. Strengthening financial inclusion and directing capital to sustainability-focused initiatives could help bridge the gap between formal finance and the informal economy in ASEAN nations.
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Ecubay, Feven, and Aitaa Kilimvi. "Implications of Informal Money Transfer Systems on Kenya’s Financial Sector." American Journal of Finance 8, no. 2 (2023): 13–27. http://dx.doi.org/10.47672/ajf.1520.
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Purpose: In Kenya, the informal money transfer system is widely used by its citizens, allowing them to make quick and easy payments across long distances. This system has bridged the gap between those with limited access to formal banking services, allowing them to make transactions without relying on a formal banking institution. While there are numerous benefits to using this type of system, it can also present potential risks to the economy and financial sector in general. This paper examines the implications of the informal money transfer system in Kenya, focusing primarily on its effects on financial sector development, financial inclusion, and risk management practices.
 Methodology: A qualitative research approach was adopted for this study to understand the complexities and nuances involved in this type of financial transaction. Secondary data was obtained from surveys conducted by government agencies such as the Central Bank of Kenya (CBK). Other sources included reports on informal money transfers such as web-based searches on informal money transfer services, and databases used by banks and other government departments related to finances. Legal and regulatory frameworks that influence the use and activities of informal money transfer systems in Kenya were also be included.
 Findings: The findings showed that informal money transfer systems provided much-needed access to finance for many individuals excluded from formal banking services, leading to increased economic development opportunities. The findings further uncovered that the drivers of informal money transfers include low-income levels, traditional banks limited geographic reach, limited capital, and a lack of trust in formal banking institutions. As such, informal money transfers aided the velocity of efficient and cheaper cross-borders and cross-regions remittances. It was however demonstrated that although informal money transfers bring benefits to their users, it also carries considerable risks.
 Recommendations: It is recommended that the current regulatory framework governing informal money transfers needs to be updated to protect consumers from fraud and theft while still allowing them to access the necessary financial resources for their economic endeavours.
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Soyibo, Adedoyin. "The Informal Financial Sector in Nigeria: Characteristics and Relationship with the Formal Sector." Development Policy Review 15, no. 1 (1997): 5–22. http://dx.doi.org/10.1111/1467-7679.00023.
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Asongu, Simplice, and Jacinta Nwachukwu. "Information asymmetry and conditional financial sector development." Journal of Financial Economic Policy 9, no. 4 (2017): 372–92. http://dx.doi.org/10.1108/jfep-11-2016-0087.
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Purpose The purpose of this study is to examine the role of reducing information asymmetry (IA) on conditional financial sector development in 53 African countries for the period 2004-2011. Design/methodology/approach The empirical evidence is based on contemporary and non-contemporary quantile regressions. Instruments for reducing IA include public credit registries (PCRs) and private credit bureaus (PCBs). Hitherto unexplored dimensions of financial sector development are used, namely, financial sector dynamics of formalization, informalization, semi-formalization and non-formalization. Findings The following findings are established. First, the positive (negative) effect of information sharing offices (ISO) on formal (informal) financial development is consistent with theory. Second, ISOs consistently increase formal financial development, with the incidence of PCRs higher in terms of magnitude, and financial sector formalization, with the impact of PCBs higher for the most part. Third, only PCBs significantly decrease informal financial development and both ISOs decrease financial sector informalization. Policy implications are discussed. Originality/value The study assesses the effect of reducing IA on financial development when existing levels of it matter because current studies based on mean values of financial development provide blanket policy implications which are unlikely to be effective unless they are contingent on prevailing levels of financial development and tailored differently across countries with high, intermediate and low initial levels of financial development.
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WANG, Lihong. "Formal and Informal Financial Channels in China." East Asian Policy 05, no. 03 (2013): 38–48. http://dx.doi.org/10.1142/s1793930513000251.
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China has achieved remarkable growth despite weak legal protection of investors and an underdeveloped financial system. Other financing channels have played a significant role in the growth of the non-state sector. However, informal financial organisations do not have mechanisms that guard against financial risks and lack a reserve and deposit insurance system. Recent measures seem inadequate in accelerating the development of China's financial market. More and bolder reforms are needed.
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Jimoh, Sodiq Olaiwola, Rashidat Sumbola Akande, Hauwah AbdulKareem, et al. "Informal Sector and Financial Development in Sub-Saharan Africa." International Journal of Economics, Management and Accounting 31, no. 2 (2023): 325–42. http://dx.doi.org/10.31436/ijema.v31i2.1064.
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Since a persistent increase is seen in the size of the informal sector and its continuous coexistence alongside the formal sector and institutional development, this study empirically examines the effect of informal sector size on the financial development in Sub-Saharan Africa for the period 1996-2019. The study represents financial market development by the financial market depth, which is regressed against informal sector size, growth rate of GDP, interest rate, trade openness, and institutional quality index. The study relied on the estimates of the Discroll-Kraay and IV-2LS. Results indicate that informality repressed financial development, while trade openness, growth rate of gross domestic product, interest rate, and institutional quality have a positive impact on financial development. It is therefore recommended for policymakers to reduce the size of informality to improve the financial sector.
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Msuya, Mwanaidi Shafii. "ICT for Improving Financial Access in Informal Sector." International Journal of ICT Research in Africa and the Middle East 7, no. 2 (2018): 17–30. http://dx.doi.org/10.4018/ijictrame.2018070102.
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Access to finance is an important factor for the sustainability and growth of business. Lack of finance means that, the business will operate under-optimal and cannot enjoy economies of scale. This article explores the difficulties of informal sector access to formal finance. The author offers means by which information and communication technology (ICT) can help bridge that gap. The study carried out asystematic literature review where several articles from Sub-Saharan Africa were reviewed. The findings show that access to finance is constrained by information asymmetry, lack of collateral, business informality, and bureaucratic procedures for accessing finance. ICT has potential to overcome these challenges by streamlining information flow, providing online collateral registration and reducing administrative processes for loan processing, disbursement and repayment. The findings suggest that, despite the big digital revolution in Africa, little has been done to align the digital world with the challenges of the informal sector.
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Nchise, Delphine Nchang, and Vivian Neba Akosso. "The Mediating Effects of Financial Service Usage on the Relationship between Financial Literacy and Retirement Preparedness in the Cameroon Informal Sector." International Journal of Business and Management Review 12, no. 4 (2024): 85–102. http://dx.doi.org/10.37745/ijbmr.2013/vol12n485102.
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The last decade has witnessed significant research interest in the area of financial literacy with specific attention on poverty. However, based on evidence of over 80 papers published since 2014 by the Consultative Group to Assist the Poor, it was revealed that there is no significant comprehensive explanation of how the usage of financial services improves people’s financial satisfaction at retirement. To this effect, this study sought to examine the extent to which the usage of both formal and informal financial services affects the retirement preparedness of people engaged in the informal sector of Cameroon. In light of this, the study aimed at justifying the continuous utilization of informal financial services at the expense of formal financial services even when financial service users have access to formal financial services. The study examined individual levels of investment literacy, cash-flow management literacy, credit management literacy, and the usage of formal and informal financial services. The study used the geographical clusters to proportionately select 400 economically active users of financial services from the seven sub-divisions of Yaoundé. Survey data were quantitatively analyzed to test the statistical relationships using the Covariance-Based Structural Equation Model [CB-SEM] with the aid of SPSS and AMOS 24 statistical packages. Findings indicated that the usage of formal financial services and informal financial services hace positive significant statistical effects on retirement preparedness. Also, the study finds that the usage of formal financial services and informal financial services has positive significant mediating effects on financial literacy and retirement preparedness. The study thus proposes the implementation of a dualistiec financial inclusion model that recognizes that both the formal and informal financial services are beneficial in the improvement of individual’s retirement preparedness in the informal sector of Cameroon and as well as in the context of developing countries.
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Salau, Oladipupo, Lalita Sen, Samuel Osho, and Oluwatoyin Adejonwo-Osho. "Empirical Investigation of Formal and Informal Sectors in Waste Recycling of the Municipal Waste Management System of Developing Countries: The Case Study of Lagos State." Journal of Environment and Ecology 7, no. 2 (2016): 21. http://dx.doi.org/10.5296/jee.v7i2.10007.
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Municipalities in metropolitan cities of developing countries often find it difficult to cope with the onerous task of providing waste services to their citizens due to financial constraints and poor infrastructure. In most of these cities, waste collection services are grossly inadequate as less than half the population is served with regular and efficient waste services. However, the shortcomings of the formal waste management system are compensated by the activities of the informal sector engaged in waste collection and make significant contributions to the MWMS through material recovery and waste recycling. In view of this, the study focuses on the roles of the formal and informal sector in municipal waste management with regards to their impacts on the recycling rate of Lagos State. In this study, we measured and compared the recycling rates between the formal and informal sectors to determine their impacts on the recycling rates of Lagos State. The study relies on primary field data, site visits and observations backed by secondary sources to investigate the range of informal sector activities in comparison to the formal sector. The findings indicate that, while both sub-sectors play significant roles in the MWMS, the informal recycling activities contribute more to the recycling rate of Lagos state than the formal sector.
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DJAOWE, Joseph, and Leonel AKO TIKU. "Mobile Money and Financial Inclusion of Rural Women in the Informal Sector: A Case of Users of Orange Money in Yagoua." Archives of Business Research 10, no. 6 (2022): 115–31. http://dx.doi.org/10.14738/abr.106.11911.
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The purpose of this article is to assess the influence of Mobile Money on the financial inclusion of rural women in the informal sector. Women's access to financial services is a key factor in economic growth and development. This work aims to measure the impact of mobile finance, mobile wallet and mobile payment on the financial inclusion of women. To this end, a questionnaire was administered to a sample of 98 rural women working in the informal sector. Data from the surveys were analyzed using SPSS software and subjected to the binary logistic regression test. From this investigation, the following results emerge: (1) mobile finance positively influences the financial education of rural women in the informal sector; (2) the mobile wallet contributes to an increase in the income of rural women in the informal sector and (3) mobile payment accelerates the access of rural women in the informal sector of Yagoua to financial services. 
 In order to further promote the financial inclusion of rural women, moderately literate, formerly excluded from the traditional financial system and working in the informal sector of Yagoua, it would be wise to find ways and means to enable them to access the services of formal financial institutions through Mobile Money.
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Schraader, Derek, Louise Whittaker, and Ian McKay. "Debt financing the capital requirements of informal market traders." South African Journal of Economic and Management Sciences 13, no. 3 (2010): 329–44. http://dx.doi.org/10.4102/sajems.v13i3.105.
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This paper describes a case study undertaken to determine whether formal sector personal debt financing might contribute to the funding of South African informal market traders. The case study was conducted at the Natalspruit informal market in Ekhuruleni, Gauteng1. Quantitative questionnaire surveys and a financial diaries project established that market traders in the Natalspruit informal market: have capital requirements large enough to justify the use of formal sector debt financing, can generate sufficient operating profits to pay for formal sector debt financing, and would be willing to utilise formal sector debt financing if given the opportunity. However, formal sector debt financing is most relevant to those informal market traders with the skills and motivation to utilize financing provided effectively and who are willing to inject more formality into their business.
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Ada Ivy Phil-Ugochukwu. "Informal financial savings practices to facilitate formal financial inclusion." World Journal of Advanced Research and Reviews 24, no. 3 (2024): 1970–79. https://doi.org/10.30574/wjarr.2024.24.3.3779.
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This review continues the exploration of the role of informal savings mechanisms, such as the group-based savings system called Ajo or Esusu in the south-west of Nigeria, in promoting financial inclusion in Nigeria, and particularly among women. Ajo/Esusu, which is a traditional form of cooperative savings and lending, is deeply rooted in many African communities and has proven effective in providing a sense of belonging and financial access to individuals excluded from the formal banking sector [31]. According to [1], these informal savings mechanisms have the potential to bridge the financial inclusion gap by offering an accessible, tested, trusted, and community-based platform for saving and borrowing. Despite significant efforts to enhance financial access, a substantial gender gap persists, with approximately 30% of adult women excluded from formal financial systems [36]. This study highlights the importance of informal savings as a viable alternative for fostering economic empowerment within communities of trust amongst marginalized groups, even in developed economies. Thus, the discourse on integrating traditional group-based savings practices with formal financial services can create a transformative pathway for increased participation in formal financial services systems. The study also assesses the impact of Ajo/ Esusu on women’s financial behavior, access to formal banking services, and their economic livelihood based on their adopting a group-based micro savings culture. It provides insights into how informal savings systems drive financial inclusion and seeks to inform policy recommendations that harness the potential of informal financial practices for the benefit of low-income women and broader economic development objectives.
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Ada, Ivy Phil-Ugochukwu. "Informal financial savings practices to facilitate formal financial inclusion." World Journal of Advanced Research and Reviews 24, no. 3 (2024): 1970–79. https://doi.org/10.5281/zenodo.15208989.
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This review continues the exploration of the role of informal savings mechanisms, such as the group-based savings system called Ajo or Esusu in the south-west of Nigeria, in promoting financial inclusion in Nigeria, and particularly among women. Ajo/Esusu, which is a traditional form of cooperative savings and lending, is deeply rooted in many African communities and has proven effective in providing a sense of belonging and financial access to individuals excluded from the formal banking sector [31]. According to [1], these informal savings mechanisms have the potential to bridge the financial inclusion gap by offering an accessible, tested, trusted, and community-based platform for saving and borrowing. Despite significant efforts to enhance financial access, a substantial gender gap persists, with approximately 30% of adult women excluded from formal financial systems [36]. This study highlights the importance of informal savings as a viable alternative for fostering economic empowerment within communities of trust amongst marginalized groups, even in developed economies. Thus, the discourse on integrating traditional group-based savings practices with formal financial services can create a transformative pathway for increased participation in formal financial services systems. The study also assesses the impact of Ajo/ Esusu on women’s financial behavior, access to formal banking services, and their economic livelihood based on their adopting a group-based micro savings culture. It provides insights into how informal savings systems drive financial inclusion and seeks to inform policy recommendations that harness the potential of informal financial practices for the benefit of low-income women and broader economic development objectives.
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Besigomwe, Kenneth. "Administrative Law and the Regulation of Informal Sector Enterprises in Uganda." Cognizance Journal of Multidisciplinary Studies 4, no. 12 (2024): 532–43. https://doi.org/10.47760/cognizance.2024.v04i12.049.
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This research explores the role of administrative law in regulating Uganda's informal sector, which plays a crucial role in employment and economic inclusivity. Despite its significance, the sector faces numerous challenges, including difficulties in formal registration, inconsistent enforcement of regulations, and limited monitoring. These barriers prevent many informal businesses from transitioning to the formal economy, restricting their potential for growth and access to essential services. The study examines the regulatory framework governing the informal sector, focusing on initiatives aimed at simplifying processes such as business registration, tax compliance, and licensing. It emphasizes the importance of legal recognition and protection for informal businesses, which enables access to financial services, social security, and intellectual property rights. However, issues like administrative discretion, corruption, and inconsistent enforcement by regulatory authorities hinder the sector’s development and create an unequal playing field for informal entrepreneurs. Additionally, the research investigates how administrative law contributes to financial inclusion, facilitating access to microfinance, mobile money, and banking services for informal businesses. By improving financial inclusion, administrative reforms can help integrate informal enterprises into the formal economy. Through case studies, the research highlights both successful and unsuccessful regulatory efforts, providing key insights into the challenges faced and the lessons learned which are essential for shaping future reforms that support sustainable economic growth in Uganda.
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Kenneth, Besigomwe. "Administrative Law and the Regulation of Informal Sector Enterprises in Uganda." Cognizance Journal of Multidisciplinary Studies (CJMS) 4, no. 12 (2024): 532–43. https://doi.org/10.47760/cognizance.2024.v04i12.049.
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<strong>This research explores the role of administrative law in regulating Uganda's informal sector, which plays a crucial role in employment and economic inclusivity. Despite its significance, the sector faces numerous challenges, including difficulties in formal registration, inconsistent enforcement of regulations, and limited monitoring. These barriers prevent many informal businesses from transitioning to the formal economy, restricting their potential for growth and access to essential services.</strong> <strong>The study examines the regulatory framework governing the informal sector, focusing on initiatives aimed at simplifying processes such as business registration, tax compliance, and licensing. It emphasizes the importance of legal recognition and protection for informal businesses, which enables access to financial services, social security, and intellectual property rights. However, issues like administrative discretion, corruption, and inconsistent enforcement by regulatory authorities hinder the sector’s development and create an unequal playing field for informal entrepreneurs.</strong> <strong>Additionally, the research investigates how administrative law contributes to financial inclusion, facilitating access to microfinance, mobile money, and banking services for informal businesses. By improving financial inclusion, administrative reforms can help integrate informal enterprises into the formal economy. Through case studies, the research highlights both successful and unsuccessful regulatory efforts, providing key insights into the challenges faced and the lessons learned which are essential for shaping future reforms that support sustainable economic growth in Uganda.</strong>
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Lensink, Robert. "The allocative efficiency of the formal versus the informal financial sector." Applied Economics Letters 3, no. 3 (1996): 163–65. http://dx.doi.org/10.1080/135048596356582.
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Appiah, Alex. "Adverse Effect on Informal Sector Self-Employed Workers Under the Tier-1 Scheme." Dama Academic Scholarly Journal of Researchers 10, no. 2 (2025): 01–09. https://doi.org/10.4314/dasjr.v10i2.1.
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The informal sector is a vital component of Ghana’s economy, employing a significant workforce. However, self-employed workers in this sector often lack access to social security, leaving them vulnerable to financial insecurity in retirement. In response, the Ghanaian government introduced the three-tier pension system under the National Pensions Act, 2008 (Act 766), with Tier-1 being a mandatory, state-managed pension scheme. While formal sector workers are automatically enrolled, participation among informal sector workers remains low due to various economic and structural challenges. This study examines the adverse effects of the Tier-1 pension scheme on self-employed informal sector workers. Using a mixed-methods research approach, data was collected from self-employed individuals in Nungua and Sunyani to assess the barriers to participation and the financial implications of the scheme. The findings indicate that significant obstacles include income irregularity, lack of awareness, perceptions of high contribution rates, mistrust in the pension system, and administrative challenges. Additionally, many informal workers prefer alternative savings mechanisms over formal pension schemes due to perceived inflexibility and uncertainty in benefits. The study recommends policy interventions such as flexible contribution models, improved public education on pension benefits, and enhanced transparency in pension fund management to increase participation and financial security for informal sector workers. Addressing these issues will make Ghana’s pension system more inclusive and sustainable.
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Raccanello, Kristiano. "DO MICROENTERPRISES’ SIZE AND STATUS MATTER TO ACCESS INFORMAL FINANCE?" PANORAMA ECONÓMICO 12, no. 23 (2017): 30. http://dx.doi.org/10.29201/pe-ipn.v12i23.105.
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Formal microenterprises (MEs) when cannot obtain the resources they need through the formal financial sector may resort to other informal intermediaries. In this paper we analyze whether MEs, according to their size and registration, rely on informal financial lenders. Through a sample of 400 MEs drawn in the city of Puebla (Mexico) during 2006, we found that both informal and formal MEs resort to informal finance but, although MEs’ status matters per-se, informal middle sized MEs rely on moneylenders as well as on loans from family and friends. As formal MEs, no matter their size, seek for funding in the fringe financial market too, the results suggest that credit for MEs is scarce.
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Mudzingwa, Lasten, Dr Rangarirai Mbizi, and Dr Kudzanai Matowanyika. "Banking sector development in a multi-currency environment: A Zimbabwean sector perspective." International Journal of Scientific Research and Management (IJSRM) 12, no. 12 (2024): 8120–31. https://doi.org/10.18535/ijsrm/v12i12.em10.
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The study sought to provide an understanding of banking sector development in Zimbabwe since the introduction of the multi-currency system. This was prompted by inability of Zimbabwe's banking system to efficiently and effectively execute its financial intermediary role of supplying affordable long-terms loans to productive sectors of the economy as a catalyst for economic growth in line with the finance-growth nexus. The study made use of an interpretivism research philosophy and utilized semi-structured interviews to gather qualitative data from a sample of fifteen senior bank executives. Study findings revealed that NPLs and thin liquidity are some of the major issues retarding the development of Zimbabwe's banking system by creating unnecessary inefficiencies. It was also concluded that most informal business entities are using the underground economy defeating banks' role of financial intermediation thereby curtailing banking sector development. Thus, the study recommends that banks should implement 'pay as you go' banking models to allow bank clients to only incur costs when a service is utilized as this will motivate and attract the informal sector into using the formal banking system alleviating the liquidity position of the sector leading banking sector development and ultimately economic development.
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Mpofu, Olipha, and Athenia Bongani Sibindi. "Informal Finance: A Boon or Bane for African SMEs?" Journal of Risk and Financial Management 15, no. 6 (2022): 270. http://dx.doi.org/10.3390/jrfm15060270.
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The aim of this study was to ascertain what can be done by the informal finance sector to close the credit gap in order to improve access to finance by SMEs. SMEs are the backbone of many economies as a result of generating employment and improving GDP. Despite playing such a major role in African economies, SMEs have been excluded from the financial systems. The informal finance sector plays a vital role by providing finance to small businesses. The study employed a literature survey with a primary focus on empirical studies that have been conducted in the African context. The study found that, generally, there are two circumstances under which most small businesses depend on informal finance. Firstly, informal finance is used as a last resort by SMEs that fail to access credit from the formal finance sector, owing to, among other issues, information asymmetry, lack of collateral security and perceived high default rates. Further, low financial literacy and the absence of credit bureaus in developing countries also contribute to the failure to access finance from formal institutions. Secondly, some entrepreneurs opt for informal finance even if they are eligible for formal finance as a result of its flexibility, convenience and simple administrative procedures. Notwithstanding the above benefits of informal finance, informal lenders are regarded as exploiting the clients by charging high interest rates. In addition, this sector suffers from limited resources; hence, it fails to fully service SMEs that require larger funding and are not eligible for formal finance. Invariably, all the studies that have been carried out confirm that access to finance is a major obstacle to the growth and development of SMEs. The development and empowerment of SMEs cannot be ignored as an important driver of the developmental agenda of most economies globally. The main policy recommendations that flow from this study, based on the policy syndrome of improving access to finance (financial inclusion) by the SME sector, include (1) the establishment of a suitable regulatory framework which will nurture the informal finance sector while promoting consumer protection, and (2) linking the formal and informal sector. On the other hand, SMEs should improve their risk management practices and also embrace FinTech platforms in order to access credit.
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D’Erasmo, Pablo N. "Access to Credit and the Size of the Formal Sector." Economía 16, no. 2 (2016): 143–200. http://dx.doi.org/10.31389/eco.80.
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This paper studies the link between credit conditions and formalization in Brazil. Over the last decade, Brazil has experienced a large increase in the level of credit and the rate of formalization. these changes are linked to a reduction in the cost of credit and policy reforms oriented toward improving the efficiency of the financial sector. The paper develops a model with endogenous formal and informal sectors to evaluate how much of the change in corporate credit and the size of the formal sector can be attributed to a reduction in financial intermediation costs. The model predicts that the reduction in intermediation costs generates an increase in the credit-to-output ratio and the fraction of formal workers, in line with the data. By affecting the allocation of capital and the entry and exit rates, the change in credit conditions has important implications for the firm size distribution and aggregate productivity.
 JEL classifications: D24, E26, L11, O16, O17
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Ndeffo, Luc Nembot, Daave Franklin Mvogo II Ossede, and Gautier Tchoffo Tameko. "Does Financial Development and Improved Institutions Really Advance Formal Entrepreneurship in Developing Countries?" South Asian Journal of Social Studies and Economics 21, no. 4 (2024): 74–94. http://dx.doi.org/10.9734/sajsse/2024/v21i4802.
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To effectively combat poverty worldwide, many development policies place particular emphasis on entrepreneurship, thanks to its ability to drive economic growth. However, there is the challenge of reducing the informal sector and promoting the formal sector. Many initiatives have therefore, been undertaken to promote formal entrepreneurship in developing countries, but little is known about the role of institutions and financial development. The aim of this article is to analyze the effects of financial development and institutions on formal entrepreneurship in developing countries. To achieve this, the system GMM method was applied to a sample of 94 developing countries between 2006 and 2018. It yielded the following results: financial development has a positive effect on formal entrepreneurship; institutions have mixed effects on formal entrepreneurship; institutions encourage financial development to foster formal entrepreneurship; and, other macroeconomic magnitudess have mixed effects. The study recommends that the leaders of these countries develop their financial systems, fight corruption more effectively, reduce regulatory constraints on business start-ups and encourage the achievement of economic policy objectives, in order to expand the size of the formal sector.
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Kunitsyna, N. N. "The informal financial sector: The scale of disaster in Russia." National Interests: Priorities and Security 16, no. 12 (2020): 2218–33. http://dx.doi.org/10.24891/ni.16.12.2218.
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Subject. The informal business more and more permeates the financial sector due to a growth in the digitization of the economy, developing IT and, consequently, cybercrime, increasing volume of e-payments. Objectives. I herein study trends in the informal financial sector of Russia and provide our recommendations for reducing the volume of cash withdrawal. Methods. The goals justifies my gradual study into legislative, regulatory, statistical, reference and periodical literature and the use of general scientific and special methods of research, such as the systems approach, formal logic, methods of comparative analysis, classification, graphical interpretation techniques, etc. Results. I analyzed trends in the scale of the informal economy and considered the integration of illegal business into the financial sector. I discovered what caused changes in the structure of higher-exposure transactions and cash withdrawal. The article also evaluates damage caused with cybercrime in the banking sector. I group basic elements of AML regulations, describe advantages of anti-legalization mechanisms and their adverse effect on the economy. The article provides my guidelines for the use of mechanisms countering the informal capital in Russia. Conclusions and Relevance. AML mechanisms should be used so as to prevent national security threats, without artificially hampering the development and advancement of the economy. The findings can underlies further research into anti-legalization activities as part of AML policy.
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Dus Poiatti, Natalia. "The Informal Labor Market and The Costs of Sovereign Borrowing." Revista Brasileira de Políticas Públicas e Internacionais - RPPI 5, no. 1 (2020): 3–28. http://dx.doi.org/10.22478/ufpb.2525-5584.2020v5n1.49501.
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The informal labor market or informal sector is responsible for an economically significant fraction of GDP production in emerging economies. Taking the informal sector to be all economic activity intentionally concealed from tax authorities to avoid tax payments, an increase in the sector adversely impacts the government ability to collect tax revenues and may increase the probability of sovereign default. In turn, higher probability of sovereign default makes borrowing in international financial markets more costly. However, the current macro-finance models do not properly account for the role of the informal sector in explaining sovereign default risk. In this paper, I estimate a vector autoregressive model measuring the causal relationships between sovereign spreads, a measure of default risk, and the size of the informal sector. The results indicate that the size of the informal sector is as important as formal output variations in explaining sovereign spreads. Therefore, policies designed by emerging economies to reduce the size of the informal labor market are important to decrease the costs of borrowing in international financial markets and increase the financing options for productive investment.
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Matari, Davis, and Ruth Temba. "The Factors Affecting the Adoption of Financial Technologies (Fintech) by Tanzania’s Informal Sector for the Growth of their Assets." International Journal of Research and Scientific Innovation VIII, no. XII (2025): 227–41. https://doi.org/10.51244/ijrsi.2024.11120023.
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Tanzania has a significant presence of informal employment, with a substantial portion of its workforce engaged in the informal sector. This segment of the economy is characterized by activities that are not regulated by the government and often lack formal documentation, such as contracts or social security benefits. The informal sector in Tanzania is substantial in size, contributing notably to the country’s overall economic activity The application of the FinTech have played major roles to the informal sector effecting and improving business performance as far as financial transactions are involved creating future sustainability to the specific businesses done by the use of different financial system and tools applied. The aim of the present research is to cast light on the positive factors and barriers affecting the adoption of the financial technologies by the informal sector of Tanzania and its implication on the assets growth. Similar to many Sub-Saharan African countries. This study employs a thematic review as a secondary research method. This approach involves a meticulous examination of peer-reviewed articles and academic journals. The objective of this research is to identify the factors that both facilitate and impede the adoption of Fintech in the informal sector. By analyzing these factors, the study aims to understand how the adoption processes influence the use of Fintech and subsequent asset growth, which in turn affects business development. To gather relevant literature, keyword searches will be conducted on academic databases such as Google Scholar and Mendeley The study reveals that the adoption of Fintech in the informal sector is influenced by a range of internal and external factors. Internally, attitudes and perceptions play a role, while externally, socio-cultural, economic, and political factors are at play. Factors that facilitate adoption include the desire to expand market and client bases and to enhance customer satisfaction. In line with other African countries, a significant portion of employment in Tanzania is within the informal sector, where Fintech remains underutilized. The primary barriers to technology adoption are social and economic, leading to a reluctance among individuals to embrace digital financial services. However, the study suggests that with access to reliable internet and smartphones, individuals are more likely to use digital banking. Mobile phones are the predominant device used for implementing Fintech in informal businesses, as indicated by various studies. Therefore, the study recommends that access to financial technologies for offering financial services should consider; costs, continuous training to enhance digital literacy, a set of proper and fair trade policies, and ensuring stakeholder participation in informal sectors like; provision of loans and other free financial support, workshops and gatherings. This will help many informal businesses to have better performance as well as enhance the technological innovations for their self-business growth that assist in the contributions of the individual and government economies.
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Quiñonez-Cabeza, Betty Maribel, Patricia Janella Salgado-Ortiz, and Alisson Mabel Zambrano-Castro. "Efecto de las alianzas estratégicas en la relación entre comercio formal, circuitos informales y mercados negros en el contexto de la sostenibilidad económica." Revista Científica Zambos 4, no. 2 (2025): 212–26. https://doi.org/10.69484/rcz/v4/n2/115.
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Formal trade, informal trade, and black markets form an interdependent system with direct implications for economic sustainability. Informality, while generating employment, limits access to labor rights and affects productivity, while black markets intensify tax evasion and unfair competition. This study examines the relationship between these sectors and assesses the impact of strategic alliances on the integration of informal trade into the formal economy. Through economic network modeling, structural market failures are identified, such as information asymmetry, negative externalities, and imperfect competition. The results show that strategic alliances between the public sector, the private sector, and informal actors facilitate the reduction of entry barriers, foster financial inclusion, and promote equity in the distribution of economic opportunities. It is concluded that multisectoral cooperation is essential to improve the sustainability of trade and mitigate structural inequalities, aligning with economic and social development strategies.
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Bilan, Yuriy, and Khiev Virak. "The role of formal and informal remittances as the determinants of formal and informal finan-cial services." Equilibrium 17, no. 3 (2022): 727–46. http://dx.doi.org/10.24136/eq.2022.025.
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Research background: The choice of financial services and remittances are important as they influence the livelihood of remittance recipients, who are mostly poor and financially excluded. In literature, extensive evidence suggests a positive impact of the size of remittances on access to financial inclusion and financial development of remittance-recipient countries. However, a concern of such studies is that they might provide a biased outcome as the available data of remittances tend to be formal, whereas informal remittances are difficult to observe. Hence, their evidence might not be applicable in developing countries where remittance transfer via informal channels is very popular. Purpose of the article: The main objective of this study is to examine the effect of the remittance channel (formal and informal) on the choice of formal, informal financial services of credit and savings of remittance recipients. Methods: As our dependent variable is a financial service which is a categorical variable (formal and informal), the paper will employ a multinomial logistic regression model to estimate the impact. The data employed in this analysis is from the Finscope survey conducted in Myanmar in 2013 and 2018. Myanmar is the best context for our study, as it is one of a big migrant-sending countries and a developing country whose financial sector is significantly underdeveloped. Findings & value added: Our findings show that formal remittances promote the use of formal financial services such as credit and savings. However, there is no evidence regarding women recipients` informal channels and formal financial services. Our evidence also suggests there is a need for the government to encourage migrant workers to transform informal remittances into formal ones by removing the barriers of formal remittance channels to promote the use of formal credit and saving among remittance-recipients who are poor and financially excluded.
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MUHAMMAD, AMANDA J., ALINA M. WAITE, and DWUENA C. WYRE. "INFORMAL SECTOR RETAIL START-UPS IN A CARIBBEAN CONTEXT." Journal of Developmental Entrepreneurship 24, no. 02 (2019): 1950007. http://dx.doi.org/10.1142/s1084946719500079.
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Retailing dominates the informal environment where activities occur in private and public spaces. Notwithstanding the contributions from informal retailing entrepreneurs (IRE), a paucity of research remains on the complex entrepreneur-environment exchange and in particular, the relationship between retailing entrepreneurs and the informal environment in Caribbean economies. This qualitative study aims to explore the informal retailing environment between 2003 and 2018 for informal sector start-ups in the Caribbean, specifically Barbados. Guided by Gnyawali and Fogel’s Integrative Model of Entrepreneurial Environments, content analysis of newspaper articles unveiled insights about the country’s environmental conditions pertaining to (a) government policies and procedures, (b) socioeconomic conditions, (c) entrepreneurial and business skills, (d) financial assistance, and (e) non-financial assistance and its impact on new enterprise creations. The study’s results imply that the Barbadian IRE have not been embraced fully, which reduces the likelihood of new informal venture creations testing the market and the potential for more IRE transitioning to the formal market. Empirical findings infer that efficient market functioning requires clear policies and procedures and fewer barriers limiting people from pursuing business opportunities, making the environment more conducive to new business start-ups.
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Onyina, P. A. Onyina. "The financial mechanism for the poor: Evidence from Ghana." Pentvars Business Journal 6, no. 1 (2012): 53–64. http://dx.doi.org/10.62868/pbj.v6i1.96.
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Traditionally, it is assumed without empirical evidence, that poor people are too poor to save hence hove been ignored by formal financial institutions. However, there exists a body of evidence showing the saving powers of the poor when given the chance. This paper presents some of the financial instruments used by poor people and gives brief discussions on the types of savings tools poor people use. These tools, the Rotating Saving Credit Associations (ROSCAs) and the Susu system, are traced to their historical roots. We then use data to show that clients of a microfinance institution actively use these savings instruments to raise lump sum. The data show that clients use several saving instruments in addition to the institutions compulsory dues. These savings tools, ignored by the financial sector could be used to mobilize deposits from the poor people by the sector. It is envisaged that both the formol and informal financial sectors would learn from such ancient savings institutions to mobilize deposits from poor households.
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Maurya, Prateeksha, and Pratap Chandra Mohanty. "What restricts credit to women enterprises? Evidence from India’s informal sector." International Journal of Social Economics 46, no. 7 (2019): 920–37. http://dx.doi.org/10.1108/ijse-08-2018-0422.
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Purpose The purpose of this paper is to determine the factors which affect the financial access of the female-owned informal enterprises (FOIEs) in India. There has been a dearth of studies particularly targeting determinants of credit access by the women-owned informal enterprises. Demand side factors affecting financial access have been studied. The study of major factors affecting access to credit by unorganized women enterprises will be useful for policy making perspectives. Design/methodology/approach The study uses nationalized micro data set on the non-agricultural informal enterprises and probit estimation has been used to identify the factors which affect the probabilities of access to credit for the FOIEs. Findings The study highlights what facilitates and hinders the financial access for the FOIEs particularly in India. These enterprises in rural areas have better chances to avail credit from formal sources. Firm size, measured by policy-making size of employment and gross profit, involvement in diversified activities, maintenance of accounting record, has positive and significant impact on access to formal credit. The younger firms and the firms operating in the southern states of the country have higher probabilities to avail credit from institutional sources. Originality/value The study used the latest data set available on Indian informal enterprises, thus provides important insights about the status of financing of enterprises in India. This study highlights the regional variations and gender disparities that are prevalent in the Indian economy.
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Musakwa, O. Kurauone, and M. Zingwina. "Characteristics of the Informal Sector That Facilitate Inclusion in The Formal Tax System: A Case of Bulawayo SMEs Retailing, Bulawayo, Zimbabwe." Indiana Journal of Economics and Business Management 4, no. 6 (2024): 1–9. https://doi.org/10.5281/zenodo.14221888.
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The informal sector in Zimbabwe, encompassing a wide range of unregistered businesses and self-employed individuals, presents significant challenges for tax compliance due to its unique characteristics. This study investigates the attributes of the informal sector that impede tax obligations, focusing on the lack of formal registration, absence of financial records, reliance on cash transactions, and limited access to financial services. A quantitative research methodology was employed, utilizing a combination of judgmental and convenience sampling to analyze data from 29 small and medium enterprises in Harare’s Central Business District. Findings indicate that 55% of participants acknowledged the absence of formal documentation as a primary barrier to tax compliance. The study highlights the need for targeted strategies that leverage these characteristics to facilitate the informal sector's integration into the formal tax system. It recommends the development of alternative tax models and enhanced communication regarding tax benefits, aiming to foster a more inclusive tax environment that benefits both the government and informal entrepreneurs.
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Lundvig Hansen, Anders, and Luís Lima Santos. "The Impact of Geographical Factors on the Banking Sector in El Salvador." International Journal of Financial Studies 13, no. 2 (2025): 110. https://doi.org/10.3390/ijfs13020110.
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This study explores how geographical factors shape El Salvador’s banking sector, particularly focusing on regional disparities, urbanization, and vulnerability to natural disasters affecting access to financial services. By employing a mixed-methods approach that combines quantitative data and qualitative interviews, the research analyzes how these geographical challenges impact financial inclusion and banking development. Data from the Central Reserve Bank of El Salvador and financial institutions is examined alongside Geographic Information Systems (GISs) to illustrate the spatial distribution of banking services. Interviews with stakeholders, including bank representatives and clients from urban and rural areas, reveal a significant urban–rural divide, with approximately 75% of bank branches and 80% of ATMs situated in urban centers, particularly in San Salvador. Rural areas face limited access to formal banking due to challenging topography and inadequate infrastructure, leading to increased financial exclusion and reliance on informal systems. Natural disasters further disrupt banking infrastructure and heighten the need for emergency loans. While urbanization has spurred financial growth, it has also resulted in informal settlements with restricted access to formal services. As its main contribution, this study provides one of the first in-depth, geographically grounded analyses of financial exclusion in El Salvador, offering original insights into how spatial inequalities and disaster vulnerability intersect to shape banking access and economic participation. The study calls for a more inclusive banking sector, recommending mobile and digital banking expansion, agent banking in underserved areas, and improved disaster risk management to enhance economic participation across all regions.
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Ezugwu, C. S., and B. C. Agbaji. "Examining the Role of Co-Operatives in Increasing Citizens Participation in Micro-Pension Scheme: Focus on Informal Sector in Enugu State." International Journal of Accounting and Financial Risk Management 5, no. 2 (2024): 1–15. https://doi.org/10.5281/zenodo.13990379.
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This study investigates the role of cooperatives in enhancing citizen participation in the micro-pension scheme within the informal sector of Enugu State. Given the significant portion of informal sector workers lacking formal pension coverage, the research aims to evaluate how cooperatives can effectively bridge this gap. Employing a sample of 500 respondents, the study examines various factors influencing participation, including awareness, financial constraints, and trust in cooperatives. The findings reveal a low level of awareness and participation among respondents, coupled with barriers such as financial constraints and trust issues. Despite these challenges, there is a notable willingness among respondents to join cooperatives in the future, suggesting untapped potential for increased engagement. Recommendations include enhancing educational and outreach programs, increasing financial accessibility, building trust through transparency, and improving cooperative engagement. By addressing these factors, cooperatives can play a pivotal role in expanding micro-pension coverage and improving financial security for informal sector workers. This study underscores the need for targeted interventions to leverage the cooperative model effectively in promoting micro-pension schemes and achieving broader social protection goals.
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Nazihah, Naura, Retno Rusdjijati, and Rochiyati Murniningsih. "Level of Financial Literacy of Women Informal Sector Workers on Welfare and Professionalisme." Jurnal Analisis Bisnis Ekonomi 20, no. 2 (2023): 122–33. http://dx.doi.org/10.31603/bisnisekonomi.v20i2.8351.
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Women dominate informal sector workers, as their working hours are irregular and do not require expertise and skills based on specialized formal education. The problem faced by workers is the level of welfare and professionalism that is not optimal. There are still many who live in poverty and do not work wholeheartedly. Likely influenced by low financial literacy. Therefore, this study aims to examine the influence of welfare and professionalism on financial literacy. The Stratified Random Sampling method was used to determine the sample and 487 respondents were obtained. The research data obtained were then processed using multiple linear regression SPSS. The hypothesis testing method uses a significance level of 5%. The results showed that well-being has a simultaneous effect on financial literacy. Professionalism simultaneously affects financial literacy
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Siam, Ahmad, and Firas Rifai. "Solving the Financial Barriers of New Innovative Startups in Jordan." Journal of Management and Sustainability 6, no. 3 (2016): 106. http://dx.doi.org/10.5539/jms.v6n3p106.
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<p>In this study, the authors aimed to examine the role of the informal financial sector financing new innovative startups projects. It is popular that the formal financial sector including banking and other financial institutions always try to avoid financing new innovative startups especially in their early stages where the risk is classified as very high.</p><p>This study was based on descriptive analytical approach with reliance on statistical instruments in order to test the hypotheses of this study. Thus, 120 survey questionnaires were distributed over the study’s sample. One hundred of those questionnaires were retrieved and used for the analysis. Results revealed that there are many barriers for financing new innovative startups, and that the formal financial sector, including banking institutions, tends to avoid financing new innovative startups especially at the first phases. This study contained implications and recommendation for academics and practitioners.</p>
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Rao, M. Yedukondala. "The Evolution and Challenges of India's Financial Landscape: A Comprehensive Analysis." RESEARCH REVIEW International Journal of Multidisciplinary 9, no. 10 (2024): 118–26. http://dx.doi.org/10.31305/rrijm.2024.v09.n10.012.
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This paper provides an in-depth examination of India's financial sector, tracing its development from post-independence to the present day. It analyzes the key components of India's financial system, including banking, capital markets, insurance, and fintech, while exploring the challenges and opportunities that shape the nation's financial landscape. The study investigates the impact of economic reforms, regulatory changes, and technological advancements on India's financial institutions and markets. Furthermore, it assesses the role of financial inclusion initiatives in bridging the gap between formal and informal financial sectors. The paper also examines the resilience of India's financial system in the face of global economic crises and evaluates its potential for future growth. By synthesizing a wide range of data and scholarly perspectives, this research offers a comprehensive overview of India's financial ecosystem, its strengths, weaknesses, and prospects for sustainable development.
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Ali, Karamat, and Abdul Hamid Abdul Hamid. "Problems of Working Women in the Rural Informal Sector of Punjab (Pakistan)." LAHORE JOURNAL OF ECONOMICS 4, no. 2 (1999): 89–99. http://dx.doi.org/10.35536/lje.1999.v4.i2.a5.
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The informal sector plays a significant role in Pakistan’s economy as well as in other developing countries. The role of the informal sector in solving the unemployment problem of Third World countries has become the focus of a conceptual and empirical debate in recent years. Most of the research takes a favourable view of this sector and suggests that it should be used as a policy instrument for the solution of the most pressing problems of developing countries, such as unemployment, poverty, income inequalities, etc. Before proceeding further, we will define the informal sector and differentiate it from the formal sector. There are various definitions, but the one given in an ILO report (1972) is generally considered the best. According to this report, informal sector activities are ways of doing things characterised by a heterogeneous array of economic activities with relative ease of entry, reliance on indigenous resources; temporary or variable structure and family ownership of enterprises, small scale of operation, labour intensive and adapted technology, skills acquired outside the formal school system, not depending on formal financial institutions for its credit needs; unregulated and unregistered units, and not observing fixed hours/days of operation.
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Fanta, Ashenafi Beyene. "Informal finance as alternative route to SME access to finance: Evidence from Ethiopia." Journal of Governance and Regulation 4, no. 1 (2015): 94–102. http://dx.doi.org/10.22495/jgr_v4_i1_c1_p1.
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The problem of SME financing has received attention of policy makers and academics in recent years owing to the role of the sector in reducing unemployment, narrowing income gap and alleviating poverty. Alternative financing schemes were suggested but their success depends to a large extent on the development of legal, informational, and institutional frameworks. Existing body of literature grossly undermines SME ability in reacting towards financial restraint and generally assumes they are passive participants in the credit market. Through a survey of 102 randomly selected firms across 10 industrial sectors in the manufacturing sector, we examined how the Ethiopian manufacturing SMEs reacted to acute shortage of formal credit. We found that SME owners actively react towards financial restraint by resorting to alternative schemes such as iqqub(variant of rotating saving and credit association), customer advances, and trade credit. Although the alternative financing schemes are not the best but they are useful in evading the impact of credit restraint on their operation and growth.
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PAULA, FÁBIO DE OLIVEIRA, and JORGE FERREIRA DA SILVA. "THE ROLE OF THE APPROPRIABILITY MECHANISMS FOR THE INNOVATIVE SUCCESS OF PORTUGUESE SMALL AND MEDIUM ENTERPRISES." International Journal of Innovation Management 23, no. 04 (2019): 1950032. http://dx.doi.org/10.1142/s1363919619500324.
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This study investigates the role of formal and informal appropriability mechanisms to appropriate revenues from innovation in several sectors. This relationship depends on factors such as sector, type of product or service, firm’s characteristics, etc. The set of appropriability mechanisms used by a firm depends on their availability and on the firm’s appropriability strategy. An empirical test using a sample of 2,122 Portuguese SMEs from four different sectors of the 2012 Community Innovation Survey indicated that for manufacturing; water supply, sewerage, waste management and remediation activities; and wholesale and retail trade, repair of motor vehicles and motorcycles; informal appropriability mechanisms, such as lead-time and complexity, are more effective for converting product innovation into financial performance in the short term. On its turn, for extractive sectors (Mining and Quarrying), formal mechanisms (e.g., patents) are better to protect product innovation and informal mechanisms are more effective to protect process innovation.
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Imamoglu, Hatice. "The spillover effects of financial system and tourism on the informal economies: Evidence from Turkey." Asian Economic and Financial Review 15, no. 2 (2025): 213–24. https://doi.org/10.55493/5002.v15i2.5292.
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This article examines the impact of the financial system and tourism on the informal economy in Turkey, a country known for its emerging economy, its status as a sun-sea-culture destination, and its substantial informal sector. Time series data from 1960 to 2019 will be used to provide real-world evidence. Both dynamic and fully modified ordinary least squares estimations will be used, in line with second-generation econometric techniques that take into account structural breaks in the series for unit root and cointegration tests. The results highlighted an inverted U-shaped relationship between the financial system and the informal economy, in contrast to a U-shaped relationship between tourism volume and the informal economy. These outcomes imply the necessity of financial inclusion and the establishment of efficient mechanisms to minimize informality. Moreover, policymakers in Turkey should prioritize bolstering the number of firms in the sector, enhancing sustainability, and promoting local sourcing and certification systems. Additionally, policymakers should prioritize enhancing affordable financing sources for small-to-medium-sized enterprises, particularly those in the tourism sector, to facilitate their transition into the formal economy.
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Baruah, Prasenjit Bujar. "Financial Access of Unorganised Manufacturing Enterprises in Assam." Space and Culture, India 2, no. 2 (2014): 4. http://dx.doi.org/10.20896/saci.v2i2.84.
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The unorganised sector is no more considered as a residual one in the developing and in the underdeveloped countries; rather it is considered as a common component of such economies. This sector is playing an important role in those countries both in terms of its contribution to the national income and employment generation. However, despite its importance, the enterprises in this sector are facing various problems. A large segment of enterprises state non-accessibility to credit is the most important problem faced by them. Moreover, existing reports and literature states that the formal financial institutions are not interested to deal with the unorganised enterprises. As a result, they have to depend on the informal sources of credit. This present paper based on secondary data analyses the various characteristics of unorganised manufacturing enterprises in Assam and their accessibility to credit. Results indicate that the average amount of outstanding loan per unorganised manufacturing enterprise in Assam is smaller than that of all-India average. Again, the enterprises in the rural areas are more dependent on the non-institutional sources of credit when compared to those in the urban areas. Similarly, the smaller enterprises have limited access to credit from the formal financial institutions as compared to the larger enterprises.
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Bonokai G. B. Gould and ChE. "Gender saving groups: Formalizing village saving groups with a gender lens." International Journal of Scientific Research Updates 4, no. 2 (2022): 126–38. http://dx.doi.org/10.53430/ijsru.2022.4.2.0159.
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This concept paper introduces a research collection on gender saving groups/ village savings loan association and financial inclusion that sets out to provide insights and evidence that enable the formal financial sector or practitioners to link with the informal financial sector to better reach women with digital financial services. The research brings together some articles and our innovative thoughts on financial inclusion that discuss specific range of interventions and experiences. It also explores and presents the opportunity for and challenges to meaningful financial inclusion for women non-literate and non-numerate populations. This article interrogate the methods used to reach last mile communities (rural and urban) and highlight the need for holistic, multi-layered programming that supports social norm change and addresses the actual constraints faced by members of these VSLA and communities.
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Williams, Colin C., Ioana Alexandra Horodnic, and Jan Windebank. "Evaluating the internal dualism of the informal sector: evidence from the European Union." Journal of Economic Studies 44, no. 4 (2017): 605–16. http://dx.doi.org/10.1108/jes-07-2016-0144.
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Purpose To transcend the current debates about whether participation in the informal sector is a result of informal workers “exclusion” or their voluntary “exit” from the formal sector, the purpose of this paper is to propose and evaluate the existence of a dual informal labour market composed of an exit-driven “upper tier” and exclusion-driven “lower-tier” of informal workers. Design/methodology/approach To do this, data from a 2013 Eurobarometer survey involving 27,563 face-to-face interviews across the European Union is reported. Findings The finding is that in the European Union, there is a dual informal labour market with those participating in the informal sector due to their exclusion from the formal sector being half the number of those doing so to voluntarily exit the formal sector. Using a logistic regression analysis, the exclusion-driven “lower tier” is identified as significantly more likely to be populated by the unemployed and those living in East-Central Europe and the exit-driven “upper tier” by those with few financial difficulties and living in Nordic nations. Research limitations/implications The results reveal the need not only to transcend either/or debates about whether participants in the informal sector are universally exclusion-or exit-driven, and to adopt a both/and approach that recognises a dual informal labour market composed of an exit-driven upper tier and exclusion-driven lower tier, but also for wider research on the relative sizes of these two tiers in individual countries and other global regions, along with which groups populate these tiers. Originality/value This is the first evaluation of the internal dualism of the informal sector in the European Union.
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Katongole, Celestine, John C. Munene, Muhammed Ngoma, Samuel Dawa, and Arthur Sserwanga. "Entrepreneur’s Intrapersonal Resources and Enterprise Success among Micro and Small Scale Women Entrepreneurs." Journal of Enterprising Culture 23, no. 04 (2015): 405–47. http://dx.doi.org/10.1142/s0218495815500144.
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The study explores the relationship between intrapersonal resources (formal schooling, formal entrepreneurial education and training, and informal entrepreneurial training and education) and success of micro and small enterprises (MSEs). Using Structural Equation Modeling, the study tested the mediating role of entrepreneurial competence in this relationship on a sample of 303 women drawn from the tourism and hospitality sector. The results reveal that entrepreneurial competence plays a mediating role in the relationship between intrapersonal resources and enterprise success. The results also show that informal entrepreneurial training is important in complementing formal entrepreneurial training and education towards enterprise success. It is also shown that formal schooling has a weak relationship with entrepreneurial competence but has varying relationships with both financial and non-financial success.
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Chokuda, Tinevimbo, Wilford Mawanza, and Farai Chimboza. "The Impact of Emerging Market Trends on the Development and Marketing of Financial Service Products in Zimbabwe Post Dollarization." Journal of Economics and Behavioral Studies 8, no. 6(J) (2017): 216–26. http://dx.doi.org/10.22610/jebs.v8i6(j).1495.
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Abstract: The research sought to analyse the impact of emerging market trends as measured by competition, technology and consumer demographics on the development and marketing of financial service products in Zimbabwe post dollarization. The Zimbabwean financial service sector has been largely characterised by new and changing market trends since dollarization. These trends have largely manifested in the form of entrance of new players in the market, a growing informal sector at the expense of the formal financial sector and the emergence of new technology paving way for the need to develop and market new financial service products. There is therefore need for financial service providers in Zimbabwe to continually embrace innovative product development and marketing strategies so as to shape banking products to fit consumers’ evolving financial needs much of which are well beyond the realm of traditional banking products. An explanatory research design was adopted in conjunction with a descriptive research design. Results from the study indicate that the entry of new financial institutions, removal of barriers between institutions, emergence of non-regulated financial institutions, increased consumer access to financial information owing to increased adoption of technology, market fragmentation and increased formal unemployment have a significant impact on the way financial service products are structured, provisioned. In light of that, it is recommended that financial service providers should design and tailor new business models to suit the emerging market environment.Keywords: Emerging market trends, development, financial services, Zimbabwe, post-dollarization
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ChE, Bonokai George B. Gould,. "The Role of Consumer Empowerment and Its Comparison in Financial Inclusion in the Global South." Asian Journal of Economics, Business and Accounting 24, no. 12 (2024): 369–83. https://doi.org/10.9734/ajeba/2024/v24i121615.
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This research examines the role of consumer empowerment in advancing financial inclusion across the Global South, focusing on Africa, Latin America, and Asia. The study aims to understand how empowering consumers through economic literacy, protection, and equitable access facilitates meaningful participation in formal financial systems. It employs a qualitative analysis of case studies from Kenya, Bangladesh, Brazil, South Africa, Liberia and India, combined with a review of relevant policy frameworks and innovations in digital financial services. Findings reveal that consumer empowerment significantly enhances financial inclusion by building trust, fostering financial capability, and enabling access to tailored products. Case studies highlight the transformative impact of mobile platforms like M-Pesa and bKash, Liberia linking the informal financial sector to the formal financial sector pilot project and regulatory measures such as Brazil’s consumer protection laws and India’s responsible lending guidelines. However, barriers such as limited infrastructure, regulatory gaps, and socio-cultural norms continue to impede progress. The study concludes that bridging these gaps requires collaborative efforts to strengthen consumer protection, expand literacy programs, and leverage technology for equitable financial access. By addressing these challenges, stakeholders can create inclusive and resilient financial ecosystems that drive sustainable economic growth in the Global South.
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Kurnia Rahayu, Siti, Isniar Budiarti, Dony Waluya Firdauas, and Viktoria Onegina. "Digitalization and informal MSME: Digital financial inclusion for MSME development in the formal economy." Journal of Eastern European and Central Asian Research (JEECAR) 10, no. 1 (2023): 9–19. http://dx.doi.org/10.15549/jeecar.v10i1.1056.
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This study examines digital financial inclusion and uses Fintech for informal micro small and medium enterprises (MSMEs) to overcome the financing gap. The researchers used primarily qualitative methods, namely a qualitative analysis strategy verification through inductive analysis. The results show that Indonesia's fintech landscape makes MSME a driver of the digital economy so that they can overcome the financing gap in the informal sector. The challenges faced by Fintech in encouraging MSME business efficiency in the form of unbalanced agency distribution, data security, data access problems, low digital financial literacy, low connectivity, and interoperability can be overcome by taking advantage of existing opportunities. These opportunities include the role of MFIs and cooperatives in promoting financial inclusion and the development of telecommunications infrastructure networks in Indonesia. The novelty of this research is the comprehensive evaluation of achieved progress in digital financial inclusion for MSMEs in Indonesia and the developed recommendation for regulations by relevant authorities to encourage the business efficiency of MSMEs through facilitating digital financial inclusion.
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Resham Thapa-Parajuli, Bhuban Chandra Joshi, Maya Timsina, and Bibek Pokharel. "From Margins to Mainstream: Uncovering Urban Informality of Street Vending in Kirtipur." Journal of Development and Administrative Studies 32, no. 1-2 (2024): 67–76. https://doi.org/10.3126/jodas.v32i1-2.75852.
Full textAbstract:
Street vending is crucial in fostering economic growth and providing livelihood opportunities, particularly for urban migrants with limited formal employment prospects. This study examines the drivers, financial performance, and challenges street vendors face in Kirtipur municipality, Nepal. Findings reveal that street vending is primarily driven by necessity, with 53.33% of respondents citing the inability to secure formal sector jobs and 51.67% pointing to a lack of alternative skills. Respondents reveal that the sector is profitable, with 98.33% of vendors reporting profits and 55% achieving monthly savings between NPR 15,000 and NPR 30,000. Despite financial literacy and access to banking for 75% of respondents, initial investments predominantly came from informal sources, reflecting limited access to formal credit. Key challenges include weather conditions (80%), municipal interventions (65%), and inadequate infrastructure, such as drinking water (48.33%) and sanitation facilities (41.67%). The study highlights the need for local governments to implement skill development programs, formalize the sector, and invest in infrastructure to enhance the sector’s viability. Inclusive policies and financial support mechanisms are essential to mitigate risks and foster sustainability. Future research could adopt longitudinal methods or broader coverage to provide deeper insights into the dynamics of street vending across diverse contexts.