Publication:
From Financial Development to Informality: A Causal Link

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dc.contributor.authorCapasso, Salvatore
dc.contributor.authorOhnsorge, Franziska L.
dc.contributor.authorYu, Shu
dc.date.accessioned2022-09-28T16:12:49Z
dc.date.available2022-09-28T16:12:49Z
dc.date.issued2022-09
dc.description.abstractFinancial development reduces the cost of accessing external financing and thus incentivizes investment in higher-productivity projects that allow firms to expand to the scale needed to operate in the formal economy. It also encourages participants of the informal sector to join the formal sector to gain access to credit and financial services. This paper documents two findings. First, countries with less pervasive informality are associated with greater financial development. Second, the impact of financial development, and especially banking sector development, on informality is causal. This causal link is established using a novel instrumental variable for domestic financial development: financial development in other (neighboring) countries. The causal link between informality and financial development is stronger in countries with greater trade openness and capital account openness. The findings are robust to alternative specifications.en
dc.identifierhttp://documents.worldbank.org/curated/en/099307409272216995/IDU0f00cd16b024ed044260ade201183af9a2753
dc.identifier.doi10.1596/1813-9450-10192
dc.identifier.urihttps://hdl.handle.net/10986/38075
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers;10192
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectACCESS TO CREDIT
dc.subjectINFORMAL EMPLOYMENT
dc.subjectDOMESTIC FINANCIAL DEVELOPMENT
dc.subjectBANKING SECTOR DEVELOPMENT
dc.subjectINFORMAL ECONOMY
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectCROSS-BORDER FINANCIAL INTEGRATION
dc.subjectEMERGING MARKETS
dc.subjectDEVELOPING ECONOMIES
dc.titleFrom Financial Development to Informalityen
dc.title.subtitleA Causal Linken
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleFrom Financial Development to Informality: A Causal Link
okr.date.disclosure2022-09-27
okr.date.doiregistration2025-04-10T10:22:04.018433Z
okr.date.lastmodified2022-09-27T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099307409272216995/IDU0f00cd16b024ed044260ade201183af9a2753
okr.guid099307409272216995
okr.identifier.doi10.1596/1813-9450-10192
okr.identifier.externaldocumentumIDU-f00cd16b-24ed-4426-ade2-1183af9a2753
okr.identifier.internaldocumentum33907049
okr.identifier.reportWPS10192
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099307409272216995/pdf/IDU0f00cd16b024ed044260ade201183af9a2753.pdfen
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicFinance and Financial Sector Development::Finance and Development
okr.topicLaw and Development::Labor & Employment Law
okr.topicPoverty Reduction::Employment and Shared Growth
okr.topicMacroeconomics and Economic Growth::Taxation & Subsidies
okr.unitEFI - Prospects Group (EPGDR)
relation.isAuthorOfPublication5807995a-9e0a-5d56-b622-d4d19e723613
relation.isAuthorOfPublication.latestForDiscovery5807995a-9e0a-5d56-b622-d4d19e723613
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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