Massenot, Baptiste and Straub, Stéphane (2011) Informal Sector and Economic Growth: The Supply of Credit Channel. TSE Working Paper, n. 11-254

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Abstract

A standard view holds that removing barriers to entry and improving judicial
enforcement would reduce informality and boost investment and growth. We show,
however, that this conclusion may not hold in countries with a concentrated bank-
ing sector or with low financial openness. When the formal sector becomes larger
in those countries, more entrepreneurs become creditworthy and the higher pres-
sure in the credit market increases the interest rate. This reduces future capital
accumulation. We show some empirical evidence consistent with these predictions.

Item Type: Monograph (Working Paper)
Language: English
Date: September 2011
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 18 Jan 2012 06:04
Last Modified: 02 Apr 2021 15:36
OAI Identifier: oai:tse-fr.eu:24946
URI: https://publications.ut-capitole.fr/id/eprint/3608

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