Informality and Bank Stability

Gareth Lui-Evans and Shalini Mitra

No 201903, Working Papers from University of Liverpool, Department of Economics

Abstract: While financial development (FD) has been widely studied in the literature as a determinant of informal sector size, there has been no focus on the role of financial stability. We find that the stability of the banking sector has a significant and robust negative effect on informality across countries. Using a recently available testing methodology based on a heteroskedasticityrobust lasso we also find strong support for Rule of Law as a key determinant of informal sector size, and some evidence for the effect of FD

Keywords: Informality; bank stability; financial development; rigorous Lasso; rule of law (search for similar items in EconPapers)
Pages: 19 pages
Date: 2019-08
New Economics Papers: this item is included in nep-iue
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:201903

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