Factors Influencing the Registration Decision in the Informal Economy

Abstract

An initial viewing of the informal financial services environment indicates consumer credit transactions as the primary activity. As a result of the need for other services, various financial product offerings have developed. Informal microinsurance programs may also surface within a community-based financial service provider or a savings group. Financial data with manual record keeping systems are evolving toward electronic documentation, especially mobile phone banking. The horizontal linkages of Fundacion para Alternativas de Desarrollo (FADES) with other informal financial service providers resulted in additional funding, increased numbers of clients, and an expansion of financial services offered. Cooperative efforts among financial intermediaries at different levels of the value chain, vertical linkages, represent another informal-formal collaboration. The savings and credit cooperatives (SACCOs) in Nepal are small, indigenous lending groups that may or may not be registered with local authorities. The Small Farmers Cooperatives Limited (SFCLs), also in Nepal, are rural-based, member-owned and controlled groups that provide financial and non-financial services.