Informal Saving Groups and Its Effect on Monetary Activities Of Nepal

Abstract

The informal sector activities account for a significant proportion of production, consumption, and employment in the country. However, informal firms tend to be small and are unable to provide basic goods and services to the entire population. Additionally, informal workers are more likely to be poor and earn lower wages compared to their formal sector counterparts. The government of Nepal is actively working to address these issues, including the enforcement of anti-money laundering (AML) regulations in the banking, finance, and cooperative sectors. However, the enforcement of AML regulations should be approached cautiously to prevent the potential transfer of informal money to other sectors and to avoid security problems. The study aims to explore the relationship between various economic indicators and informal monetary activities in Nepal, with a focus on finding ways to regulate and formalize these activities. Large samples of 385 were surveyed through structured questionnaire. The informal economy in Nepal has important macroeconomic consequences, and the government is working to address the challenges it poses. However, the enforcement of AML regulations should be approached cautiously to prevent the potential transfer of informal money to other sectors and to avoid security problems. The study aims to explore the relationship between various economic indicators and informal monetary activities in Nepal, with a focus on finding ways to regulate and formalize these activities. Keywords: Informal monetary activities, Hidden economy, AML regulations, Small saving groups, Remittance