When do enterprises prefer informal credit?

This page in:

Could enterprises voluntarily choose to tap informal credit markets to avoid the additional scrutiny or even harassment that engaging with formal financial institutions might invite?

A recent paper, using firm-survey data for 29 countries, suggests so. Fourteen percent of firms in this sample rely exclusively on informal finance and the percentage goes up as corruption, complexity of taxation (but interestingly not tax rates) and property registration increase.

Join the Conversation

The content of this field is kept private and will not be shown publicly
Remaining characters: 1000