Barriers to Entry and Returns to Capital in Informal Activities

• Tác giả: Michael Grimm
• Ngôn ngữ: eng
• Ký hiệu phân loại: 338.7 Business enterprises
• Thông tin xuất bản: World Bank, Washington, DC, 2017
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 246373
• Chủ đề: 1. ACCESS TO CAPITAL; 2. ACCOUNTS; 3. BANK POLICY; 4. BARRIER TO ENTRY; 5. BORROWING CAPACITY

Tóm tắt

This paper investigates the patterns of capital entry barriers and capital returns in informal Micro and Small Enterprises (MSE's) using a unique micro data set seven West-African countries. The author's findings support the view of a heterogeneous informal sector that is not primarily host to subsistence activities. While an assessment of initial investment identifies some informal activities with negligible entry barriers, a notable cost of entry is associated to most activities. The authors find very heterogeneous patterns of capital returns in informal MSE's. At very low levels of capital, marginal returns are extremely high- often exceeding 70 percent per month. Above a capital stock of 150 international dollars, marginal returns are found to be relatively low at around 4 to 7 percent monthly. The authors provide some evidence that the high returns at low capital stocks reflect high risks. At the same time, most MSE's appear to be severely capital constrained.