Short-Term Impacts of Formalization Assistance and a Bank Information Session on Business Registration and Access to Finance in Malawi
Despite regulatory efforts designed to make it easier for firms to formalize, informality remains extremely high among firms in Sub-Saharan Africa. In most of the region, business registration in a national registry is separate from tax registratio...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/01/23922000/short-term-impacts-formalization-assistance-bank-information-session-business-registration-access-finance-malawi http://hdl.handle.net/10986/23653 |
| Summary: | Despite regulatory efforts designed to
make it easier for firms to formalize, informality remains
extremely high among firms in Sub-Saharan Africa. In most of
the region, business registration in a national registry is
separate from tax registration. This paper provides initial
results from an experiment in Malawi that randomly allocated
firms into a control group and three treatment groups: a) a
group offered assistance for costless business registration;
b) a group offered assistance with costless business
registration and (separate) tax registration; and c) a group
offered assistance for costless business registration along
with an information session at a bank that ended with the
offer of business bank accounts. The study finds that all
three treatments had extremely large impacts on business
registration, with 75 percent of those offered assistance
receiving a business registration certificate. The findings
offer a cost-effective way of getting firms to formalize in
this dimension. However, in common with other studies,
information and assistance has a limited impact on tax
registration. The paper measures the short-term impacts of
formalization on financial access and usage. Business
registration alone has no impact for either men or women on
bank account usage, savings, or credit. However, the
combination of formalization assistance and the bank
information session results in significant impacts on having
a business bank account, financial practices, savings, and
use of complementary financial products. |
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