Leveraging Digital Financial Solutions to Promote Formal Business Participation

This paper explores economic informality and how it relates to digital financial inclusion. It focuses specifically on the potential role that digital financial services–including those accessed through mobile phones and the internet can play in en...

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Main Authors:	Klapper, Leora, Miller, Margaret, Hess, Jake
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	FINANCIAL LITERACY DIGITAL BANKING FINANCIAL INCLUSION BUSINESS FORMALIZATION INFORMAL ECONOMY MOBILE MONEY MICROFINANCE TAXATION BUSINESS REGISTRATION ELECTRONIC PAYROLL
Online Access:	http://documents.worldbank.org/curated/en/486541556177550649/Leveraging-Digital-Financial-Solutions-to-Promote-Formal-Business-Participation http://hdl.handle.net/10986/31654

id	okr-10986-31654
recordtype	oai_dc
spelling	okr-10986-316542021-05-25T09:23:42Z Leveraging Digital Financial Solutions to Promote Formal Business Participation Klapper, Leora Miller, Margaret Hess, Jake FINANCIAL LITERACY DIGITAL BANKING FINANCIAL INCLUSION BUSINESS FORMALIZATION INFORMAL ECONOMY MOBILE MONEY MICROFINANCE TAXATION BUSINESS REGISTRATION ELECTRONIC PAYROLL This paper explores economic informality and how it relates to digital financial inclusion. It focuses specifically on the potential role that digital financial services–including those accessed through mobile phones and the internet can play in encouraging businesses to formalize their operations. The data show wide variations in the extent of informality as well as the financial inclusion of informal business owners. The paper finds that digital financial services can make it easier for informal firms to register and operate as a formal business, while also creating synergies between individual reform efforts. For example, companies that use a digital payroll system can easily make pension contributions when online platforms are available. Digital financial transactions also make it easier for governments to enforce laws and regulations, including tax collection. However, there are several important caveats. It is not clear that formalizing small transactions is an effective way to increase tax collection. As the digital economy grows and countries seek to curb informality, policymakers should tailor their programs to the needs and realities of different groups of enterprises. 2019-05-07T20:53:57Z 2019-05-07T20:53:57Z 2019 Working Paper http://documents.worldbank.org/curated/en/486541556177550649/Leveraging-Digital-Financial-Solutions-to-Promote-Formal-Business-Participation http://hdl.handle.net/10986/31654 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FINANCIAL LITERACY DIGITAL BANKING FINANCIAL INCLUSION BUSINESS FORMALIZATION INFORMAL ECONOMY MOBILE MONEY MICROFINANCE TAXATION BUSINESS REGISTRATION ELECTRONIC PAYROLL
spellingShingle	FINANCIAL LITERACY DIGITAL BANKING FINANCIAL INCLUSION BUSINESS FORMALIZATION INFORMAL ECONOMY MOBILE MONEY MICROFINANCE TAXATION BUSINESS REGISTRATION ELECTRONIC PAYROLL Klapper, Leora Miller, Margaret Hess, Jake Leveraging Digital Financial Solutions to Promote Formal Business Participation
description	This paper explores economic informality and how it relates to digital financial inclusion. It focuses specifically on the potential role that digital financial services–including those accessed through mobile phones and the internet can play in encouraging businesses to formalize their operations. The data show wide variations in the extent of informality as well as the financial inclusion of informal business owners. The paper finds that digital financial services can make it easier for informal firms to register and operate as a formal business, while also creating synergies between individual reform efforts. For example, companies that use a digital payroll system can easily make pension contributions when online platforms are available. Digital financial transactions also make it easier for governments to enforce laws and regulations, including tax collection. However, there are several important caveats. It is not clear that formalizing small transactions is an effective way to increase tax collection. As the digital economy grows and countries seek to curb informality, policymakers should tailor their programs to the needs and realities of different groups of enterprises.
format	Working Paper
author	Klapper, Leora Miller, Margaret Hess, Jake
author_facet	Klapper, Leora Miller, Margaret Hess, Jake
author_sort	Klapper, Leora
title	Leveraging Digital Financial Solutions to Promote Formal Business Participation
title_short	Leveraging Digital Financial Solutions to Promote Formal Business Participation
title_full	Leveraging Digital Financial Solutions to Promote Formal Business Participation
title_fullStr	Leveraging Digital Financial Solutions to Promote Formal Business Participation
title_full_unstemmed	Leveraging Digital Financial Solutions to Promote Formal Business Participation
title_sort	leveraging digital financial solutions to promote formal business participation
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/486541556177550649/Leveraging-Digital-Financial-Solutions-to-Promote-Formal-Business-Participation http://hdl.handle.net/10986/31654
_version_	1764474832451272704

Leveraging Digital Financial Solutions to Promote Formal Business Participation

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