Informality

Entry Regulation and the Formalization of Microenterprises in Developing Countries

Is there a policy rationale for actively trying to encourage small firms to formalise? In the last two decades, hundreds of regulatory reforms have been implemented in countries across the world with the primary objective of making it easier to formally register a business.

Policy Paper
17 Jul 2019

Exit from Informality: The Stick Treatment

Most firms are informal throughout the developing world; and most small and medium enterprises (SMEs) (60-80%) do not register with tax authorities, lowering the tax base. This remains a persistent phenomenon despite the numerous attempts made to encourage registration.

Research Note
7 Feb 2017

SME’s registration Evidence from an RCT in Bangladesh

Firms informality is pervasive in Bangladesh. In this paper published in Economics Letters, De Giorgi and Rahman (2013) implemented an information campaign on registration and find that the treatment made firms more aware, but had no impact on registration.

Journal Article
3 Feb 2017

Enhancing the Benefits of Formalization: Experimental Evidence from the Introduction of the Entreprenant Status in Benin

Using a randomized experiment, the authors show that enhancing the benefits of formalization through personalized assistance induces more firms to formalize.

Research Note
11 Jan 2017

Can Enhancing the Benefits of Formalization Induce Informal Firms to Become Formal? Experimental Evidence from Benin

Governments around the world have introduced reforms to attempt to make it easier for informal firms to formalize. However, most informal firms have not gone on to become formal, especially when tax registration is involved.

Working Paper
10 Jan 2017

Finding a Path to Formalization in Benin: Early Results after the Introduction of the Entreprenant Legal Status

In April 2014, the Government of Benin launched the entreprenant status, a simplified and free legal regime offered to small informal businesses to enter the formal economy.

Working Paper
14 Oct 2016

Rethinking Indonesia's Informal Sector

This paper published in the World Development reviews competing theories about the causes of informality in developing countries and uses new data to determine which theory best explains the persistence and scale of Indonesia’s informal sector.

Journal Article
11 Oct 2016

Transitioning into the Formal - Women Entrepreneurs in the Informal Economy of Nepal

This qualitative study aims to understand how and why different groups of informal women entrepreneurs in Nepal engage with, or make the transition to the formal sector

Research Note
5 May 2016

Making it Easier for Women in Malawi to Formalize their Firms and Access Financial Services

In contexts where formalization of firms and access to financial services is low, research shows that combining business registration with an information session at a bank including the offer of a business bank account leads to increased usage of financial services by entrepreneurs.

Research Note
10 Jul 2015

Short-Term Impacts of Formalization Assistance and a Bank Information Session on Business Registration and Access to Finance in Malawi

Despite regulatory efforts designed to make it easier for firms to formalize, informality remains extremely high among firms in Sub-Saharan Africa. In most of the region, business registration in a national registry is separate from tax registration.

Working Paper
20 Apr 2015

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