Determinants of using formal vs informal financial sector in BRICS group

Abstract

The determinants of the usage of the formal versus the informal financial sector within the BRICS countries are analysed. Regression tree and probit methods are applied to a subset of observations from the 2021 Global Findex database. Results of these different methods are robust and complement each other. The main findings are: (a) Individuals with regular income has higher probability of using the formal financial sector; (b) There is a nonlinear relationship with age and the financial sector channels, individual above 36 are less likely to use the informal channel but are more likely to use the formal channel.