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 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.

Bibliographic Details

Main Authors:	Campos, Francisco, Goldstein, Markus, McKenzie, David
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-01
Subjects:	ACCESS TO BANK ACCOUNTS, ACCESS TO CREDIT, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCE, ACCESS TO FINANCIAL SERVICES, ACCESS TO INSURANCE, ACCESS TO MARKETS, ACCESS TO SAVINGS, ACCOUNT, ACCOUNT USAGE, ACCOUNTS, ADMINISTRATIVE RECORDS, BANK ACCESS, BANK ACCOUNT, BANK ACCOUNTS, BANK LOAN, BANK LOANS, BANKS, BILLS, BORROWING, BRIBE, BUSINESS ACTIVITIES, BUSINESS CENTERS, BUSINESS DEVELOPMENT, BUSINESS DEVELOPMENT SERVICES, BUSINESS ENABLING, BUSINESS ENABLING ENVIRONMENT, BUSINESS ENVIRONMENT, BUSINESS EXPENSES, BUSINESS FACILITATION, BUSINESS FINANCES, BUSINESS INFORMATION, BUSINESS LOAN, BUSINESS OWNER, BUSINESS OWNERS, BUSINESS PERFORMANCE, BUSINESS PLAN, BUSINESS PURPOSES, BUSINESS REGISTRATION, BUSINESS RESOURCES, BUSINESS TRAINING, BUSINESSES, CASH DEPOSITS, CC, CERTIFICATE, CERTIFICATES, CHAMBER OF COMMERCE, COLLATERAL, CONTACT INFORMATION, COST SAVINGS, CREDIT ASSOCIATION, DEBT OUTSTANDING, DEPRECIATION, DIRECT COSTS, EARNINGS, ECONOMIC ACTIVITY, ECONOMIC GROWTH, EDUCATION LEVELS, ELECTRICITY, ENABLING ENVIRONMENT, ENTERPRISE DEVELOPMENT, ENTREPRENEUR, ENTREPRENEURS, EXCHANGE RATE, FARM ENTERPRISES, FEDERAL TAXES, FEMALE BUSINESS, FEMALE ENTREPRENEURS, FINANCIAL ACCESS, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL LITERACY, FINANCIAL PERFORMANCE, FINANCIAL PRODUCTS, FINANCIAL SERVICES, FINANCING NEED, FIXED ASSETS, FORMAL BANK, FORMAL FINANCIAL SECTOR, FORMAL SAVINGS, GENDER, GENDER DIFFERENCE, GENDER EQUALITY, GENDER GAP, GENDER GAPS, GREATER ACCESS, HARDWARE, HOUSEHOLD FINANCES, HUMAN RESOURCES, IDENTIFICATION NUMBER, IMPACT EVALUATION, INCOME TAX, INDIVIDUAL ENTREPRENEURS, INFORMAL ECONOMY, INFORMAL FINANCIAL INSTITUTIONS, INNOVATION, INNOVATIONS, INSPECTION, INSPECTIONS, INTEREST RATE, INTERNATIONAL BANK, INTERNATIONAL FINANCE, LACK OF ACCESS, LICENSE, LICENSES, MANUFACTURING, MIDDLEMAN, MINIMUM BALANCE, NEW BUSINESS, NEW PRODUCTS, ONE-STOP SHOP, OPEN ACCESS, OUTREACH, OUTSTANDING DEBT, PHOTO, PRIVATE ENTERPRISE, PRIVATE SECTOR, PRIVATE SECTOR DEVELOPMENT, PROCUREMENT, PROJECT MANAGEMENT, PROTOCOL, RECEIPTS, REGISTRATION APPLICATION, REGISTRATION OF BUSINESS, REGISTRATION PROCESS, REGISTRATION PROCESSES, REGISTRY, REPORTING, RESULT, RESULTS, SALES, SAVINGS ACCOUNTS, SAVINGS PRODUCT, SELLING, SMALL BUSINESS, SMALL ENTERPRISES, SUBSTITUTES, TECHNICAL ASSISTANCE, TECHNICAL ASSISTANCE PROJECT, TERM CREDIT, TRANSACTION, TRANSACTION COSTS, TURNAROUND TIME, VERIFICATION, WOMEN ENTREPRENEURS, WOMEN ENTREPRENEURSHIP, AFRICA GENDER POLICY, GENDER INNOVATION LAB, WOMEN AND PRIVATE SECTOR DEVELOPMENT,
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
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