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Informality, Micro and Small Enterprises, and the 2016 Demonetisation Policy in India

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  • Takashi Kurosaki

Abstract

Using a panel dataset collected in 2014–2017, we examine small and micro entrepreneurs in Delhi, India, distinguishing registered (more formal) and unregistered (more informal) enterprises. The dataset contains not only information on the characteristics of entrepreneurs and firms, but also General Social Survey trust information. Quantitative analysis comparing the two types of entrepreneurs reveals that their social backgrounds and trust were different, and that the difference is correlated with firm performance. In the micro and small enterprise sector in Delhi, registered and unregistered firms coexist with different kinds of superiority, but the business transactions of both types of firms remain highly cash‐dependent even after the 2016 Demonetisation shock.

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  • Takashi Kurosaki, 2019. "Informality, Micro and Small Enterprises, and the 2016 Demonetisation Policy in India," Asian Economic Policy Review, Japan Center for Economic Research, vol. 14(1), pages 97-118, January.
    • Handle: RePEc:bla:asiapr:v:14:y:2019:i:1:p:97-118
    DOI: 10.1111/aepr.12245
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    References listed on IDEAS

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    1. Smriti Sharma, 2014. "Benefits of a registration policy for microenterprise performance in India," Small Business Economics, Springer, vol. 42(1), pages 153-164, January.
    2. Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-126, Summer.
    3. Yujiro Hayami & A. K. Dikshit & S. N. Mishra, 2006. "Waste pickers and collectors in Delhi: Poverty and environment in an urban informal sector," Journal of Development Studies, Taylor & Francis Journals, vol. 42(1), pages 41-69.
    4. Subash Sasidharan & S. N. Rajesh Raj, 2014. "The Growth Barriers of Informal Sector Enterprises: Evidence from India," The Developing Economies, Institute of Developing Economies, vol. 52(4), pages 351-375, December.
    5. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
    6. Gabriel Ulyssea, 2018. "Firms, Informality, and Development: Theory and Evidence from Brazil," American Economic Review, American Economic Association, vol. 108(8), pages 2015-2047, August.
    7. Ashwini Deshpande & Smriti Sharma, 2013. "Entrepreneurship or Survival? Caste and Gender of Small Business in India," Working papers 228, Centre for Development Economics, Delhi School of Economics.
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    Cited by:

    1. Karmakar, Sudipto & Narayanan, Abhinav, 2020. "Do households care about cash? Exploring the heterogeneous effects of India's demonetization," Journal of Asian Economics, Elsevier, vol. 69(C).
    2. Fabiane Tubino Garcia & Carla Schwengber ten Caten & Elaine Aparecida Regiani de Campos & Aline Marian Callegaro & Diego Augusto de Jesus Pacheco, 2022. "Mortality Risk Factors in Micro and Small Businesses: Systematic Literature Review and Research Agenda," Sustainability, MDPI, vol. 14(5), pages 1-37, February.
    3. Fouillet, Cyril & Guérin, Isabelle & Servet, Jean-Michel, 2021. "Demonetization and digitalization: The Indian government's hidden agenda," Telecommunications Policy, Elsevier, vol. 45(2).
    4. Esther Salvi & Frank-Martin Belz & Sophie Bacq, 2023. "Informal Entrepreneurship: An Integrative Review and Future Research Agenda," Entrepreneurship Theory and Practice, , vol. 47(2), pages 265-303, March.
    5. C. C. Sreelakshmi & Sangeetha K. Prathap, 2024. "Effect of COVID-19 health threat on consumer’s perceived value towards mobile payments in India: a means-end model," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(3), pages 763-787, September.

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