Informality and Profitability : Evidence from a New Firm Survey in Ecuador
This paper estimates the impact of informality on firm profits using a new firm-level survey designed specifically for this study. The survey was administered to about 1,200 firms with 50 employees or less in Ecuador's two largest cities, Quit...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/05/17654994/informality-profitability-evidence-new-firm-survey-ecuador http://hdl.handle.net/10986/15573 |
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okr-10986-155732021-04-23T14:03:19Z Informality and Profitability : Evidence from a New Firm Survey in Ecuador Medvedev, Denis Oviedo, Ana Maria ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING ACCOUNTING PRACTICES AFFILIATE BANK LOAN BASIC NEEDS BORROWER BRIBES BUSINESS ASSOCIATIONS BUSINESS FINANCE BUSINESS HOURS BUSINESS OBJECTIVES BUSINESS OPPORTUNITY BUSINESS OWNERS CASH FLOWS COMMERCIAL REGISTRY COMPANY CONTRACT ENFORCEMENT CORRUPTION CREDIT MARKET CUSTOMER BASE DEBT DOWNSIZING DUMMY VARIABLES EARNINGS ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT ELECTRICITY EMPLOYEE EMPLOYER EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES ENFORCEMENT MECHANISMS ENTERPRISE GROWTH ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURIAL ABILITY ENTREPRENEURS EQUIPMENT EXCLUSION EXPANSION EXPENDITURE EXPENDITURES FAMILIES FAMILY BUSINESS FEMALE ENTREPRENEURS FIRM PERFORMANCE FIRM SIZE FIRM SIZES FIRMS FIXED COST FORMAL FINANCE GENDER GPS GROSS SALES INFORMAL LENDERS INFORMATION ASYMMETRIES INSPECTION INSPECTIONS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORY LEGAL REQUIREMENT LIABILITY LICENSE LICENSES LOAN LOAN MATURITY LOAN SIZES MANUFACTURING MATURITIES MICRO-ENTERPRISE MICRO-ENTERPRISES MICRO-ENTREPRENEURS MICRO-FINANCE MUNICIPALITIES NEW BUSINESS NOTARY OPEN ACCESS PENALTIES PRESENT VALUE PRODUCTIVITY PROFITABILITY PUBLIC BANKS PUBLIC POLICIES RECEIPTS REGISTRY REGULATORY REQUIREMENTS RESULT RESULTS RETAINED EARNINGS SHOPS SMALL BUSINESS SMALL BUSINESS LENDING SMALL BUSINESSES SMALL FIRM SMALL FIRMS SME SME FINANCING SME SUPPORT PROGRAMS SOCIAL SECURITY SOURCE OF INCOME SOURCES OF FINANCE START-UP STATISTICAL ANALYSIS SUPPLIER TAX TAX IDENTIFICATION NUMBER TIME PERIODS TRANSPORT TURNOVER UNION URBAN AREAS USES VENDORS WEB This paper estimates the impact of informality on firm profits using a new firm-level survey designed specifically for this study. The survey was administered to about 1,200 firms with 50 employees or less in Ecuador's two largest cities, Quito and Guayaquil, plus two main centers of economic activity near the northern and southern borders. The paper's results confirm that the extent of firms' compliance with a set of regulatory requirements is linked to the perceived costs and benefits of informality, such as the probability of detection by the authorities and the likelihood of being fined. Nonetheless, taking into account the non-random placement of firms along the formality-informality spectrum and controlling for a large set of firm, owner, and location characteristics, the paper finds that more formal firms tend to be more profitable and have higher output per worker. This impact operates, inter alia, through more formal firms' ability to obtain improved access to credit and achieve higher sales by issuing receipts to clients. 2013-09-04T16:09:50Z 2013-09-04T16:09:50Z 2013-05 http://documents.worldbank.org/curated/en/2013/05/17654994/informality-profitability-evidence-new-firm-survey-ecuador http://hdl.handle.net/10986/15573 English en_US Policy Research Working Paper;No. 6431 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Ecuador |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING ACCOUNTING PRACTICES AFFILIATE BANK LOAN BASIC NEEDS BORROWER BRIBES BUSINESS ASSOCIATIONS BUSINESS FINANCE BUSINESS HOURS BUSINESS OBJECTIVES BUSINESS OPPORTUNITY BUSINESS OWNERS CASH FLOWS COMMERCIAL REGISTRY COMPANY CONTRACT ENFORCEMENT CORRUPTION CREDIT MARKET CUSTOMER BASE DEBT DOWNSIZING DUMMY VARIABLES EARNINGS ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT ELECTRICITY EMPLOYEE EMPLOYER EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES ENFORCEMENT MECHANISMS ENTERPRISE GROWTH ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURIAL ABILITY ENTREPRENEURS EQUIPMENT EXCLUSION EXPANSION EXPENDITURE EXPENDITURES FAMILIES FAMILY BUSINESS FEMALE ENTREPRENEURS FIRM PERFORMANCE FIRM SIZE FIRM SIZES FIRMS FIXED COST FORMAL FINANCE GENDER GPS GROSS SALES INFORMAL LENDERS INFORMATION ASYMMETRIES INSPECTION INSPECTIONS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORY LEGAL REQUIREMENT LIABILITY LICENSE LICENSES LOAN LOAN MATURITY LOAN SIZES MANUFACTURING MATURITIES MICRO-ENTERPRISE MICRO-ENTERPRISES MICRO-ENTREPRENEURS MICRO-FINANCE MUNICIPALITIES NEW BUSINESS NOTARY OPEN ACCESS PENALTIES PRESENT VALUE PRODUCTIVITY PROFITABILITY PUBLIC BANKS PUBLIC POLICIES RECEIPTS REGISTRY REGULATORY REQUIREMENTS RESULT RESULTS RETAINED EARNINGS SHOPS SMALL BUSINESS SMALL BUSINESS LENDING SMALL BUSINESSES SMALL FIRM SMALL FIRMS SME SME FINANCING SME SUPPORT PROGRAMS SOCIAL SECURITY SOURCE OF INCOME SOURCES OF FINANCE START-UP STATISTICAL ANALYSIS SUPPLIER TAX TAX IDENTIFICATION NUMBER TIME PERIODS TRANSPORT TURNOVER UNION URBAN AREAS USES VENDORS WEB |
| spellingShingle |
ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING ACCOUNTING PRACTICES AFFILIATE BANK LOAN BASIC NEEDS BORROWER BRIBES BUSINESS ASSOCIATIONS BUSINESS FINANCE BUSINESS HOURS BUSINESS OBJECTIVES BUSINESS OPPORTUNITY BUSINESS OWNERS CASH FLOWS COMMERCIAL REGISTRY COMPANY CONTRACT ENFORCEMENT CORRUPTION CREDIT MARKET CUSTOMER BASE DEBT DOWNSIZING DUMMY VARIABLES EARNINGS ECONOMIC ACTIVITY EDUCATIONAL ATTAINMENT ELECTRICITY EMPLOYEE EMPLOYER EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES ENFORCEMENT MECHANISMS ENTERPRISE GROWTH ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURIAL ABILITY ENTREPRENEURS EQUIPMENT EXCLUSION EXPANSION EXPENDITURE EXPENDITURES FAMILIES FAMILY BUSINESS FEMALE ENTREPRENEURS FIRM PERFORMANCE FIRM SIZE FIRM SIZES FIRMS FIXED COST FORMAL FINANCE GENDER GPS GROSS SALES INFORMAL LENDERS INFORMATION ASYMMETRIES INSPECTION INSPECTIONS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORY LEGAL REQUIREMENT LIABILITY LICENSE LICENSES LOAN LOAN MATURITY LOAN SIZES MANUFACTURING MATURITIES MICRO-ENTERPRISE MICRO-ENTERPRISES MICRO-ENTREPRENEURS MICRO-FINANCE MUNICIPALITIES NEW BUSINESS NOTARY OPEN ACCESS PENALTIES PRESENT VALUE PRODUCTIVITY PROFITABILITY PUBLIC BANKS PUBLIC POLICIES RECEIPTS REGISTRY REGULATORY REQUIREMENTS RESULT RESULTS RETAINED EARNINGS SHOPS SMALL BUSINESS SMALL BUSINESS LENDING SMALL BUSINESSES SMALL FIRM SMALL FIRMS SME SME FINANCING SME SUPPORT PROGRAMS SOCIAL SECURITY SOURCE OF INCOME SOURCES OF FINANCE START-UP STATISTICAL ANALYSIS SUPPLIER TAX TAX IDENTIFICATION NUMBER TIME PERIODS TRANSPORT TURNOVER UNION URBAN AREAS USES VENDORS WEB Medvedev, Denis Oviedo, Ana Maria Informality and Profitability : Evidence from a New Firm Survey in Ecuador |
| geographic_facet |
Latin America & Caribbean Ecuador |
| relation |
Policy Research Working Paper;No. 6431 |
| description |
This paper estimates the impact of
informality on firm profits using a new firm-level survey
designed specifically for this study. The survey was
administered to about 1,200 firms with 50 employees or less
in Ecuador's two largest cities, Quito and Guayaquil,
plus two main centers of economic activity near the northern
and southern borders. The paper's results confirm that
the extent of firms' compliance with a set of
regulatory requirements is linked to the perceived costs and
benefits of informality, such as the probability of
detection by the authorities and the likelihood of being
fined. Nonetheless, taking into account the non-random
placement of firms along the formality-informality spectrum
and controlling for a large set of firm, owner, and location
characteristics, the paper finds that more formal firms tend
to be more profitable and have higher output per worker.
This impact operates, inter alia, through more formal
firms' ability to obtain improved access to credit and
achieve higher sales by issuing receipts to clients. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Medvedev, Denis Oviedo, Ana Maria |
| author_facet |
Medvedev, Denis Oviedo, Ana Maria |
| author_sort |
Medvedev, Denis |
| title |
Informality and Profitability : Evidence from a New Firm Survey in Ecuador |
| title_short |
Informality and Profitability : Evidence from a New Firm Survey in Ecuador |
| title_full |
Informality and Profitability : Evidence from a New Firm Survey in Ecuador |
| title_fullStr |
Informality and Profitability : Evidence from a New Firm Survey in Ecuador |
| title_full_unstemmed |
Informality and Profitability : Evidence from a New Firm Survey in Ecuador |
| title_sort |
informality and profitability : evidence from a new firm survey in ecuador |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/05/17654994/informality-profitability-evidence-new-firm-survey-ecuador http://hdl.handle.net/10986/15573 |
| _version_ |
1764429437450846208 |