Abstract
Formal microenterprises (MEs) when cannot obtain the resources they need through the formal financial sector may resort to other informal intermediaries. In this paper we analyze whether MEs, according to their size and registration, rely on informal financial lenders. Through a sample of 400 MEs drawn in the city of Puebla (Mexico) during 2006, we found that both informal and formal MEs resort to informal finance but, although MEs’ status matters per-se, informal middle sized MEs rely on moneylenders as well as on loans from family and friends. As formal MEs, no matter their size, seek for funding in the fringe financial market too, the results suggest that credit for MEs is scarce.
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