Investigating the informal mode of financing utilized for construction financing in Somalia: Some evidence

Abstract

Intermediation is the main objective of any financial industry. While financing services are provided by formal financial institutions in the advanced world, financing services are provided differently in emerging economies. Hence, various alternative modes of financing are used in these countries. The motivation behind this study is to investigate the informal mode of financing employed for construction financing in Somalia. While utilizing time-value of money, this study found that financier-tenants do not consider time in their decision-making. Finally, this study argues that this informal mode of financing is more advantageous to landlords.