Informal Sector and Economic Growth: The Supply of Credit Channel

Details

Serval ID
serval:BIB_4A772E045F4A
Type
Report: a report published by a school or other institution, usually numbered within a series.
Publication sub-type
Working paper: Working papers contain results presented by the author. Working papers aim to stimulate discussions between scientists with interested parties, they can also be the basis to publish articles in specialized journals
Collection
Publications
Institution
Title
Informal Sector and Economic Growth: The Supply of Credit Channel
Author(s)
Massenot B., Straub S.
Institution details
Université de Lausnne - HEC - DEEP
Issued date
09/2011
Number
12.03
Genre
Cahiers de recherches économiques
Language
english
Number of pages
20
Abstract
A standard view holds that removing barriers to entry and improving judicial enforcement would reduce informality and boost investment and growth. We show, however, that this conclusion may not hold in countries with a concentrated banking sector or with low financial openness. When the formal sector becomes larger in those countries, more entrepreneurs become creditworthy and the higher pressure in the credit market increases the interest rate. This reduces future capital accumulation. We show some empirical evidence consistent with these predictions.
Keywords
informal sector, barriers to entry, credit market, enforcement, financial openness
Create date
13/08/2012 16:28
Last modification date
21/08/2019 5:15
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