Formalization of manufacturing firms in Bangladesh

Shamsuzzoha,; Tanaka, Makoto

doi:10.1111/rode.12778

Cited by 5 publications

(3 citation statements)

References 36 publications

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“…Heterogeneous impact suggests that formalization helps manufacturing farms to earn more. Our nding is supported by the study of Shamsuzzoha and Tanaka (2021) who also explored formalization is positively correlated to productivity. The inconclusive impact of formalization on revenue and pro t of retail or service related small rms can be explained as formalization opens less opportunity for retail or service rms than manufacturing rms (Shamsuzzoha & Tanaka, 2021).…”

Section: And Conclusionsupporting

confidence: 70%

“…Our nding is supported by the study of Shamsuzzoha and Tanaka (2021) who also explored formalization is positively correlated to productivity. The inconclusive impact of formalization on revenue and pro t of retail or service related small rms can be explained as formalization opens less opportunity for retail or service rms than manufacturing rms (Shamsuzzoha & Tanaka, 2021). Further, heterogeneous impact analysis based on gender of owner shows that male owned rms earn more pro t whereas female owned rms earn more revenue if formalized.…”

Section: And Conclusionsupporting

confidence: 70%

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Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Bari,

Khan,

Khan

et al. 2024

Preprint

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Governments often have strong motivation to formalize ever-growing informal firms. However, whether formalization improves the earnings of small firms is a crucial policy question. Firms chose to be formal so the impact evaluation of formalization suffers for self-selection bias. This study aims at examining the impact of the impact of formalization on revenue and profit of informal small firms using Randomized Encouragement Design. Small firms in Malawi, one of the poorest countries, are considered as the units of analysis in the present study. This study uses dataset prepared by Campos et al. (2018) who conducted Randomized Control Trial to examine different ways to formalize small firms in Malawi. Campos et al. (2023) examined the impact of Offer for cost-free business registration, coupled with a bank account opening information session as one of the treatment variables and formalization as one of the outcome variables in their study. In contrast, this study considers the offer for cost-free business registration, coupled with a bank account opening information session as an instrumental variable and formalization as the treatment variable. The result shows that formalization significantly increases revenue and profit of small firms. Heterogeneous impact analysis suggests formalization helps only manufacturing farms to earn more.

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Section: And Conclusionsupporting

confidence: 70%

Section: And Conclusionsupporting

confidence: 70%

Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Bari,

Khan,

Khan

et al. 2024

Preprint

View full text Add to dashboard Cite

show abstract

“…Syverson (2011) expresses that labor productivity is the most prevalent indicator for measuring business productivity. Moreover, it is widely used to estimate productivity, for instance, Demena and Murshed (2018) study productivity spillover as a transmission channel of foreign direct investment in Sub-Saharan Africa, as well as Shamsuzzoha and Tanaka (2021), study the relationship between formality and firm performance.…”

Section: Methodsmentioning

confidence: 99%

Tax Policy for SMEs, Corruption Perception, and Firm Productivity in Indonesia: A Firm-Level Analysis

Putra

2022

jimf (j.ilm.manaj.forkamma)

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This study aims to assess the impact of a policy change in presumptive tax schemes and corruption on firm performance in Indonesia. The central government has enacted a new presumptive tax regulation targeting small and medium enterprises (SMEs) started in 2013. The policy intends to attract small businesses to pay income tax and promote formalization. Additionally, we also assess the impact of corruption compared to the effect of taxation, on firm productivity. Taking advantage of the reliable panel data from the World Bank Enterprise Survey Indonesia in the years 2009 and 2015, along with fixed-effect regression models, we find that the presumptive tax scheme does not significantly have an impact on firm productivity. This result may be explained by the formalization approach. In addition, it is confirmed that corruption is negatively and significantly affects firm productivity. This study also affirms several studies that corruption has a greater impact, compared to taxation, on firm productivity.

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Motivating factors affecting formalization of small informal enterprises: Evidence from an emerging economy

Mehjabeen,

Khan

2024

Bus Strat Dev

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This study investigates the motivating factors behind the formalization of small informal enterprises in Bangladesh, an emerging economy, employing the lens of institutional theory. It emphasizes how regulatory structures, normative pressures, and cognitive understandings shape the decisions of SME owners in emerging economies like Bangladesh. A significant portion of small enterprises in Bangladesh remain informal, leading to concerns over economic development, productivity, and efficiency. Informal enterprises often face challenges such as limited access to finance, market entry barriers, and regulatory hurdles. Recognizing the need for formalization, this research aims to understand the drivers behind this transition. A questionnaire survey of 304 informal enterprises reveals that streamlined regulatory systems, particularly one‐stop solutions and simplified registration processes, are primary motivators for formalization. Additionally, flexible collateral requirements for financing and lower levels of technological adoption also significantly influence this transition. These findings contribute to the academic discourse on informal businesses in emerging economies and provide key policy implications for fostering formalization through targeted strategies and policies.

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Formalization of manufacturing firms in Bangladesh

Cited by 5 publications

References 36 publications

Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Navigating Growth: A Formalized Approach to Small Firm Revenue and Profit Enhancement

Tax Policy for SMEs, Corruption Perception, and Firm Productivity in Indonesia: A Firm-Level Analysis

Motivating factors affecting formalization of small informal enterprises: Evidence from an emerging economy

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