Short-Term Impacts of Formalization Assistance and a Bank Information Session on Business Registration and Access to Finance in Malawi

43 Pages Posted: 20 Apr 2016 Last revised: 27 Apr 2018

See all articles by Francisco Campos

Francisco Campos

World Bank

Markus Goldstein

World Bank

David J. McKenzie

World Bank - Development Research Group (DECRG); IZA Institute of Labor Economics

Francisco Moraes Leitao Campos

affiliation not provided to SSRN

Date Written: January 1, 2015

Abstract

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.

Keywords: Business in Development, Gender and Development, Access to Finance, Private Sector Economics, Private Sector Development Law, Marketing, Transport Services

Suggested Citation

Campos, Francisco and Goldstein, Markus P. and McKenzie, David John and Campos, Francisco Moraes Leitao, Short-Term Impacts of Formalization Assistance and a Bank Information Session on Business Registration and Access to Finance in Malawi (January 1, 2015). World Bank Policy Research Working Paper No. 7183, Available at SSRN: https://ssrn.com/abstract=2579882

Francisco Campos (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Markus P. Goldstein

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

David John McKenzie

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Francisco Moraes Leitao Campos

affiliation not provided to SSRN

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
78
Abstract Views
689
rank
340,542
PlumX Metrics