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Informal vs. Small Formal vs. Large Formal?

Ryan Hahn's picture

Stephen O'Connell, a consultant in the South Asia region of the World Bank, has some interesting questions in the comments section of this post on how firms finance investment:

  • In addition to differences in small vs. big firm financing, I wonder how different are financing patterns of informal sector firms vs. small formal sector vs. large formal sector firms.
  • Has anything been done to examine such differences, and the effect this may have on informal firm performance and whether patterns of access/use create additional incentives to keep informal firms from growth and/or formalization?
  • It would be interesting to know your thoughts on the subject or if there is existing literature on the topic. I would expect little due to prior data limitations but this may now be possible with the newest enterprise survey data.
     


Perhaps one of our readers has the answers? Let us know in the comments section.

Comments

Submitted by Asli on
On the informal firms, you may find the following paper by Rafael La Porta and Andrei Shleifer of interest: http://www.economics.harvard.edu/faculty/shleifer/files/unofficial_economy_brookings_2008.pdf

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