Islam, Asif M.

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Islam, Asif M.

Development Economics, Enterprise Analysis Group

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Development Economics, Enterprise Analysis Group

Last updated September 12, 2023

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An Exploration of the Relationship between Police Presence, Crime, and Business in Developing Countries

(World Bank, Washington, DC, 2016-02) Islam, Asif

Economic theory predicts that a rise in police presence will reduce criminal activity. However several studies in the literature have found mixed results. This study adds to the literature by exploring the relationship between the size of the police force and crime experienced by firms. Using survey data for about 12,000 firms in a cross-section of 27 developing countries, the study finds that increasing the size of the police force is negatively associated with crime experienced by firms. The results are confirmed using a panel of firms for a subset of countries for which data are available. The study also finds that this negative relationship is stronger under certain macro-economic circumstances.
Gendered Laws, Informal Origins, and Subsequent Performance

(World Bank, Washington, DC, 2021-08) Hyland, Marie ; Islam, Asif

This research explores the relationship between laws that discriminate on the basis of gender and the probability that a female-owned business begins operating in the informal sector. This is achieved by tracing the origins of formal businesses surveyed in the World Bank Enterprise Surveys and merging this with information on the level of legal equality between genders as measured by the Women, Business and the Law database. In addition, the research explores whether starting a business informally has any differential effect on subsequent firm performance depending on the gender of the owner(s). The results show that gender discriminatory laws increase the likelihood that firms with female owners will begin operations in the informal sector; as expected, this does not hold for enterprises that are solely owned by men. Furthermore, the research provides evidence that firms that began operations informally have poorer performance years later—a relationship that exists both for firms with female owners and for firms fully owned by men. The results show notable variation by region.
How Prevalent Are Credit-Constrained Firms in the Formal Private Sector?: Evidence Using Global Surveys

(World Bank, Washington, DC, 2023-07-13) Islam, Asif M. ; Rodriguez Meza, Jorge

This study develops a measure of firm-level credit constraints by leveraging refinements in survey instruments for a widely used database. Using data on more than 65,000 firms across 109 economies, the study uncovers several insights. Around 30 percent of firms in the formal private sector are credit constrained. Firms that are credit-constrained tend to be smaller and negatively correlated with performance. The more developed the economy, the lower the share of credit-constrained firms. One striking finding is that 52 percent of firms do not apply for loans as they have sufficient credit. For some economies, this may be more indicative of poor opportunities for the expansion of firms and thus the lack of demand for credit. The findings suggest that for policies that improve access to credit to be effective, they should go hand in hand with interventions that provide opportunities for firms to expand.
Decomposing the Labor Productivity Gap between Upper-Middle-Income and High-Income Countries

(World Bank, Washington, DC, 2019-12) Amin, Mohammad ; Islam, Asif ; Khalid, Usman

Using firm-level survey data on registered private firms collected by the World Bank's Enterprise Surveys, this paper compares the level of labor productivity in 22 upper-middle-income countries and 11 high-income countries for which comparable data are available. The results show that labor productivity in the upper-middle-income countries is about 57.5 percent lower than in the high-income countries. The productivity difference is robust and holds for firms of different sizes and industries. The analysis uses the Oaxaca-Blinder decomposition to identify the sources of the productivity gap. It finds that the endowment effect and the structural effect contribute roughly equally to the productivity gap. Several firm- and country-level variables determine the productivity gap. The biggest contributors via the endowment effect include tertiary education attainment, law and order, and quality management proxied by international quality certification. Factors that contribute most via the structural effect include market size, secondary education attainment, and law and order. Thus, the results underline the importance of human capital, institutions, and market size for closing the productivity gap between the upper-middle-income and high-income countries.
Discriminatory Environment, Firms' Discriminatory Behavior, and Women's Employment in the Democratic Republic of Congo

(World Bank, Washington, DC, 2020-04) Hyland, Marie ; Islam, Asif ; Muzi, Silvia

This paper contributes to better understanding firms' discriminatory behavior in the presence of gender-based legal discrimination and its linkages with labor market outcomes for women in a developing country setting. Using data collected through the World Bank Enterprise Surveys in the Democratic Republic of Congo, the paper documents the existence of nonnegligible employer discrimination and limitations in women's autonomy in the presence of a discriminatory environment. Interestingly, these are more pervasive outside the capital city, Kinshasa, which suggests that cultural norms or differences in regulation enforcement may be at play. The paper also finds that firms' discriminatory behavior harms women's labor market outcomes, in their representation among the upper echelons of management and participation in the overall workforce. The negative relationship between restrictions from discriminatory behaviors and female employment is particularly strong in the manufacturing sector.
Mobile Money and Investment by Women Businesses in Sub-Saharan Africa

(World Bank, Washington, DC, 2020-07) Islam, Asif ; Muzi, Silvia

This study connects two important findings in Sub-Saharan Africa. First, digital technologies such as mobile money have become widespread and have increased investment by businesses, especially in East Africa. Second, women-owned business in the region significantly lag their male counterparts in capital investments. Using data for 16 Sub-Saharan African economies, the study connects the two findings by exploring whether mobile money use by women-owned firms increases their investment. The findings indicate that the positive relationship between mobile money use and investment is largely driven by women-owned firms and is statistically insignificant for men-owned firms. Potential channels of these effects are explored. Women-owned firms that use mobile money to transact with suppliers are more likely to invest. Mobile money also seems to facilitate greater provision of customer credit and generally greater demand for more credit by women-owned firms. Such patterns are not observed for men-owned firms.
The Resilience of SMEs and Large Firms in the COVID-19 Pandemic: A Decomposition Analysis

(World Bank, Washington, DC, 2023-09-12) Amin, Mohammad ; Jolevski, Filip ; Islam, Asif M.

This study analyzes the difference in the decline in sales between small and medium-size enterprises and large firms (the “gap”) following the outbreak of COVID-19 in 19 developing countries. The decline in sales as a percentage of the pre-pandemic level was bigger for small and medium-size enterprises by 12.2 percentage points. The paper uses the Kitagawa-Oaxaca-Blinder and quantile decomposition methods to estimate individual factors’ contributions to the gap at the mean and across the sales decline distribution. Several important results emerge. First, relative to large firms, small and medium-size enterprises faced greater incidence of input supply disruptions during the pandemic, had lower initial labor productivity levels, and were concentrated in country-industry cells with a bigger sales declines. These differences in the level of factors widened the gap. Small and medium-size enterprises also suffered more than large firms from a given level of financial constraints, input supply disruptions, and country-industry-specific factors, and benefitted less from a given level of initial labor productivity. These differences in the returns to factors also widened the gap. Second, the gap was much larger at the relatively high quantiles of sales decline distribution, indicating that relative to large firms, small and medium-size enterprises were much less resilient to large shocks than small shocks. Third, individual factors’ contribution to the gap varied across the sales decline distribution. Thus, the optimal policy mix depends on the size of the shock. Fourth, there were some important differences between geographical regions in what drove the gap. Thus, an eclectic policy approach is needed that duly accounts for the prevailing local conditions.
The Burden of Water Shortages on Informal Firms

(World Bank, Washington, DC, 2018-05) Islam, Asif

The informal sector in developing economies is a significant source of livelihood for a sizable portion of the population. This study uncovers the effect of poor water infrastructure on the productivity of informal firms. This is achieved using firm-level data for 12 developing economies between 2009 and 2014. The findings indicate that an increase of one standard deviation of the total duration of water shortages in a month can lead to annual average losses of about 14.5 percent of the monthly sales per worker for the average informal firm in the sample that uses water for business activities.
Do Government Private Subsidies Crowd Out Entrepreneurship?

(World Bank, Washington, DC, 2014-06) Islam, Asif

Although several studies have found a negative relationship between government spending and entrepreneurship, much debate remains regarding the components of government spending responsible for this association. This paper contributes to the literature by specifically exploring the relationship between government private subsidies and entrepreneurship. By combining macroeconomic government spending data with individual level entrepreneurship data, the paper finds a negative association between the share of private subsidies and entrepreneurship. However, findings are less straightforward when the analysis delves deeper into the components of private subsidies and their association with different kinds of entrepreneurship.
The Time Cost of Documents to Trade

(Taylor and Francis, 2015-06-04) Amin, Mohammad ; Islam, Asif

The article shows that the number of documents required to export and import tend to increase the time cost of shipments. However, the increase in the time cost of increased documentation is much larger for countries that are relatively poor and large in size. One interpretation here is that the relatively rich countries that have more resources and the relatively small countries that rely more on trade invest more in building efficient documentation systems. Our findings suggest caution in interpreting how input-based measures, such as the number of required documents to trade, affect outcome measures.