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Informal Firms and Financial Inclusion: Status and Determinants

In: Foreign Direct Investment and Small and Medium Enterprises Productivity and Access to Finance

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  • Subika Farazi

Abstract

Many firms in the developing world — including a majority of micro, small, and medium enterprises (MSMEs) — operate in the informal economy. The informal firms face a variety of constraints, making it harder for them to do business and grow. Lack of access to finance is often cited as the biggest operational constraint these firms face. This chapter documents the use of finance and financing patterns of informal firms, highlights differences between use of finance by formal and informal firms, and identifies the most significant characteristics of informal firms that are associated with higher use of financial services.

Suggested Citation

  • Subika Farazi, 2015. "Informal Firms and Financial Inclusion: Status and Determinants," World Scientific Book Chapters, in: Khee Giap Tan & Kong Yam Tan (ed.), Foreign Direct Investment and Small and Medium Enterprises Productivity and Access to Finance, chapter 6, pages 105-132, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814678810_0006
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