From lower levels of formality to a formal firm in Ecuador: Short-run evidence

Segundo Camino-Mogro, Juan Dominguez () and María Auxiliadora Guzman ()
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Juan Dominguez: Escuela Superior Politécnica del Litoral, ESPAE Graduate School of Management.
María Auxiliadora Guzman: Universidad Católica de Santiago de Guayaquil; Universidad Castilla La Mancha

Economics Bulletin, 2025, vol. 45, issue 1, 668 - 677

Abstract: This paper evaluates the impact of an entry deregulation on the change from a less formal business to a higher level of formality of a business in Ecuador by analyzing a recent reform called Sociedad por Acciones Simplificadas (SAS). We use novel and under-explore administrative data sets and apply a difference-in-difference approach comparing the physical (in-person) to the electronic firm creation schemes, before and after the policy implementation. We find that the reform does not increase the probability of changing from a less formal business to the highest level of formalization in the short-run.

Keywords: Bureaucracy; entry regulation; informality (search for similar items in EconPapers)
JEL-codes: D7 H3 (search for similar items in EconPapers)
Date: 2025-03-30
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