Credit Constraints, Sector Informality and Firm Investments: Evidence from a Panel of Uruguayan Firms

Gandelman, Néstor; Rasteletti, Alejandro

doi:10.1016/s1514-0326(17)30016-8

Cited by 18 publications

(7 citation statements)

References 22 publications

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“…In addition, access to credit and lack of secure property rights also impose a significant barrier. However, firms in the informal sector lack access to critical infrastructure and credit markets to improve production (Gandelman & Rasteletti, 2017). Moreover, firms may voluntarily choose to operate in the informal sector in search of cheap labour and take advantage of those markets' unregulated nature (Farrell, 2004).…”

Section: Brief Literature Reviewmentioning

confidence: 99%

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Informality and poverty in Africa: Which comes first?

Bolarinwa

Simatele

2022

Sustainable Development

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Existing empirical work has investigated the relationship between informality and poverty. However, most of this work has neglected the feedback effect. This empirical paper explores the bi-directional causality between poverty and informality within the SGMM-PVAR framework among 40 selected high-income and low-income Sub-Saharan countries between 1991 and 2018. Our results support the heterogeneity argument, suggesting that sub-Saharan African informality is demand and supplyled. The income level of the country mediates the direction of effect. Bi-direction causality is observed for low-income countries. Causality in middle-income countries runs from poverty to informality. The results suggest that a certain level of informality may be desirable, especially in low-income countries.

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Section: Brief Literature Reviewmentioning

confidence: 99%

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confidence: 99%

Informality and poverty in Africa: Which comes first?

Bolarinwa

Simatele

2022

Sustainable Development

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“…First, it erodes the tax base and therefore undermines fiscal sustainability (Hallam & Zanella, 2017). Second, it negatively affects productivity (Taymaz, 2009), economic growth (Elgin & Birinci, 2016), investments (Gandelman & Rasteletti, 2017), and employment. Finally, it leads to poverty (Canelas, 2018), income inequality (Berdiev & Saunoris, 2018), and higher public debt (Abid & Sekrafi, 2020).…”

Section: Introductionmentioning

confidence: 99%

Do remittances moderate financial development–informality nexus in North Africa?

Akçay

Karabulutoğlu

2021

African Development Review

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The prevalent informality and sheer size of international remittances characterize the North African countries. This study primarily aims at investigating how remittances moderate the effects of financial development on the informal economy in North African countries. Employing pool mean group (PMG)/panel ARDL approach and a balanced panel data set over the period 1980-2015, we find that remittances moderate the negative relationship between financial development and informal economy. This finding suggests that remittances bolster financial development, which, in turn, decreases the informal economy. Based on this result, we recommend that tailored policies and interventions are needed to promote financial development and international remittances in the North African region. 1 | INTRODUCTION Informality, or the informal economy, defined as "all economic activities by workers and economic units that are-in law or practice-not covered or insufficiently covered by formal arrangements" (OECD & ILO, 2019, p. 155), is a common issue that countries face all over the world, particularly developing countries. From the definition, it is clear that informality mainly manifests itself in production and employment. Indeed, according to Loayza (2016), over 70% of employment and 30% of production take place in the informal sector in a typical developing country. On a global scale, the informal economy accounts for 13% of world GDP, corresponding to US$10 trillion (Lewis, 2016). In terms of employment, two billion people, equivalent to about 62.1% of the working-age population, are informally employed in the world (ILO, 2018, p. 13). Finally, OECD and ILO (2019) estimates that 81% of all enterprises operate in the informal sector in the world. High levels of informal economy place an increasing strain on the formal economy and impede economic development and inclusive economic growth, particularly in developing countries. That said, the informal economy adversely affects a developing economy in several ways. First, it erodes the tax base and therefore undermines fiscal sustainability (

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“…Credit market concentration, bank lending rates, and the loan to asset ratio are all factors that moderate the sensitivity of a firm's asset‐to‐growth opportunities (Bonini et al, 2016; Vithessonthi et al, 2017). Credit constraints and overall credit growth have a strong impact on firms' investment decisions and outward direct investments (Gandelman & Rasteletti, 2017; Gómez, 2019; Orive, 2016; Regis, 2018; Wang et al, 2016). For those firms without financing constraints, the sensitivity of investments to cash flows may be driven by excessive risk aversion on the part of firm managers (Bhabra et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

The combined impacts of fiscal and credit policies on green firm's investment opportunity: Evidences from Chinese firm‐level analysis

Chang

Liu

et al. 2021

Manage Decis Econ

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This article investigates the combined impact of fiscal and credit policies on green‐firm investment opportunities using firm‐level panel data of green industries in China. Our empirical results demonstrate that subsidies, tax rebates, and green credit loans have significantly U‐shaped nexuses with green‐firm investment opportunities: Subsidies, tax rebates, and green credit policies generate significant interactions on green‐firm investment opportunities. External financing constraints may weaken the incentive of subsidies, tax rebates, and green credit loans on green‐firm investment opportunities.

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Credit Constraints, Sector Informality and Firm Investments: Evidence from a Panel of Uruguayan Firms

Cited by 18 publications

References 22 publications

Informality and poverty in Africa: Which comes first?

Informality and poverty in Africa: Which comes first?

Do remittances moderate financial development–informality nexus in North Africa?

The combined impacts of fiscal and credit policies on green firm's investment opportunity: Evidences from Chinese firm‐level analysis

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