Gatti, RobertaHonorati, Maddalena2012-05-252012-05-252008-01-01https://hdl.handle.net/10986/6444The authors use firm-level, cross-county data from Investment Climate surveys in 49 developing countries to investigate an important channel through which informality can affect productivity: access to credit and external finance. Informality is measured as self-reported lack of tax compliance in a sample of registered firms that also answered questions on a large set of other characteristics. The authors find that more tax compliance is significantly associated with more access to credit both in OLS and in country fixed effects estimates. In particular, the link between credit and formality is stronger in high-formality countries. This suggests that firms' balance sheets are relatively more informative for financial institutions in environments where signal extraction is a less noisy process. The authors' results are robust to the inclusion of a wide array of correlates and to two-stage estimation.CC BY 3.0 IGOABSENCE OF CORRUPTIONACCESS TO CREDITACCESS TO EXTERNAL FINANCEACCESS TO FINANCEACCESS TO FINANCINGACCESS TO FORMAL CREDITACCOUNTINGASSET VALUEBALANCE SHEETSBANK COMPETITIONBANK FINANCINGBANK POLICYBANKSBIASESBOOK VALUEBRIBEBRIBESBUSINESS ASSOCIATIONSCALCULATIONCAPITAL MARKETSCASH FLOWCHECKSCLAIMCOLLATERALCOLLEGE EDUCATIONCORPORATE TAX RATECORRUPTIONCREDIT % NEEDSCREDIT ACCESSCREDIT AVAILABILITYCREDIT BUREAUCREDIT CARDSCREDIT COEFFICIENTSCREDIT CONSTRAINTSCREDIT INFORMATIONCREDIT LINECREDIT MARKETCREDIT REGISTRYCREDIT WORTHINESSDEMAND FOR CREDITDEPENDENTDEPOSITDEPOSIT MONEY BANKSDEVELOPING COUNTRIESEARNINGSECONOMIC DEVELOPMENTECONOMIC GROWTHEMERGING ECONOMIESEMERGING MARKETSEQUIPMENTEQUITY ISSUANCEEXCLUSIONEXPORTEREXTERNAL FINANCEEXTERNAL FINANCINGEXTRA CASHFAMILY LOANSFINANCIAL CORPORATIONFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFINANCIAL MARKETFINANCIAL MARKET DEVELOPMENTFINANCIAL MARKETSFINANCING NEEDSFINANCING OBSTACLESFIRM PERFORMANCEFIRM SALESFIXED ASSETSFOREIGN BANKFOREIGN BANKSFOREIGN OWNERSHIPGOVERNMENT REVENUESINCOMEINFORMAL CREDITINFORMAL ECONOMYINFORMAL FINANCEINFORMAL WORKERSINSTITUTIONAL DEVELOPMENTINSTRUMENTINTERNATIONAL BANKINVESTMENT CLIMATELABOR FORCELABOR MARKETLARGE ENTERPRISESLARGE FIRMSLEGAL RIGHTSLIMITED ACCESSLINE OF CREDITLOANLOAN SIZESLOCAL BANKLOCAL BANKSLOW INCOMEMACROECONOMICSMARKET DEVELOPMENTMARKET SEGMENTATIONMEDIUM ENTERPRISESMICRO BUSINESSMIDDLE EASTMONEY LENDERSNET PROFITSNORTH AFRICAOBSTACLES TO FINANCEOVERDRAFTOVERDRAFT FACILITYOWNERSHIP STRUCTUREPOLITICAL ECONOMYPRIVATE CREDITPRIVATE CREDIT BUREAUPROBABILITYPRODUCTIVITYPROPERTY RIGHTSPUBLIC CREDITPUBLIC ECONOMICSPUBLIC FINANCESPUBLIC POLICYRETURNSALESSALES GROWTHSECONDARY EDUCATIONSECONDARY SCHOOLSELF-EMPLOYMENTSHADOW ECONOMIESSHADOW ECONOMYSHARE OF PROFITSSHAREHOLDERSMALL BUSINESSSMALLER FIRMSSOCIAL SECURITIESSOCIAL SECURITYSOCIAL SECURITY CONTRIBUTIONSSOURCE OF INFORMATIONSTART-UPSUB-SAHARAN AFRICATAXTAX ADMINISTRATIONTAX BURDENTAX CODESTAX COMPLIANCETAX RATETAX RATESTAXATIONTRADE CREDITTRADE FINANCINGTRANSACTIONTRANSACTION COSTSTRANSPARENCYTRANSPORTTURNOVERVALUE OF ASSETSWORK FORCEWORKING CAPITALWorld Bank10.1596/1813-9450-4476