Informal Firms and Financial Inclusion: Status and Determinants - Farazi 2012

The paper documents the use of finance and financing patterns of informal firms, highlights differences between use of finance by formal and informal firms and identifies the most significant characteristics of informal firms that are associated with higher use of financial services. The analysis shows that use of loans and bank accounts for business by informal firms is very low and a vast majority finances their day‐to‐day operations and investments through sources other than financial institutions (internal funds, moneylenders, family and friends).