Informality and profitability: evidence from a new firm survey in Ecuador
Denis Medvedev and
Ana Maria Oviedo
No 6431, Policy Research Working Paper Series from The World Bank
Abstract:
This paper estimates the impact of informality on firm profits using a new firm-level survey designed specifically for this study. The survey was administered to about 1,200 firms with 50 employees or less in Ecuador's two largest cities, Quito and Guayaquil, plus two main centers of economic activity near the northern and southern borders. The paper's results confirm that the extent of firms'compliance with a set of regulatory requirements is linked to the perceived costs and benefits of informality, such as the probability of detection by the authorities and the likelihood of being fined. Nonetheless, taking into account the non-random placement of firms along the formality-informality spectrum and controlling for a large set of firm, owner, and location characteristics, the paper finds that more formal firms tend to be more profitable and have higher output per worker. This impact operates, inter alia, through more formal firms'ability to obtain improved access to credit and achieve higher sales by issuing receipts to clients.
Keywords: Access to Finance; Microfinance; E-Business; Banks&Banking Reform; Debt Markets (search for similar items in EconPapers)
Date: 2013-05-01
New Economics Papers: this item is included in nep-dev, nep-iue and nep-mfd
References: Add references at CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/wps6431.pdf (application/pdf)
Related works:
Journal Article: Informality and Profitability: Evidence from a New Firm Survey in Ecuador (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:6431
Access Statistics for this paper
More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi (ryazigi@worldbank.org).