IDEAS home Printed from https://ideas.repec.org/a/spr/jqecon/v19y2021i3d10.1007_s40953-021-00239-x.html
   My bibliography  Save this article

What Drives Informality of Micro and Small Cameroonian Businesses?

Author

Listed:
  • Novice Patrick Bakehe

    (The University of Douala)

  • Georges Dieudonné Mbondo

    (The University of Douala)

Abstract

The objective of this paper is to econometrically estimate the determinants of business informality in Cameroon. The data are from the second Survey on Employment and the Informal Sector (EESI 2) carried out in 2010 on 3560 Cameroonian micro and small enterprises. From six probit models, we find that gender, age and educational level of the entrepreneur, size and level of capital of the company, access to infrastructure, the fact that the activity is in contact with the administrative bodies and administrative red tape have an influence on the formalisation of small production units in Cameroon. Whether we take into account only the sub-sample of companies that are willing to pay or already pay taxes or the sub-sample of those which are registered or willing to be registered, we show that only the educational level of the entrepreneur, the level of capital of the company, access to infrastructure and administrative red tape have a significant effect on the formalisation of businesses. These results allow us to address the most interesting economic policy issues such as the reasons for non-registration of companies apart from tax evasion.

Suggested Citation

  • Novice Patrick Bakehe & Georges Dieudonné Mbondo, 2021. "What Drives Informality of Micro and Small Cameroonian Businesses?," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(3), pages 597-610, September.
    • Handle: RePEc:spr:jqecon:v:19:y:2021:i:3:d:10.1007_s40953-021-00239-x
    DOI: 10.1007/s40953-021-00239-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40953-021-00239-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40953-021-00239-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Edward L. Glaeser & Bruce Sacerdote & José A. Scheinkman, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 507-548.
    2. Novice Patrick Bakehe, 2016. "Informalité et productivité des très petites et petites entreprises au Cameroun," Innovations, De Boeck Université, vol. 0(3), pages 105-124.
    3. Benhassine,Najy & Mckenzie,David J. & Pouliquen,Victor Maurice Joseph & Santini,Massimiliano & Benhassine,Najy & Mckenzie,David J. & Pouliquen,Victor Maurice Joseph & Santini,Massimiliano, 2016. "Can enhancing the benefits of formalization induce informal firms to become formal ? experimental evidence from Benin," Policy Research Working Paper Series 7900, The World Bank.
    4. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2017. "The Economic Consequences of Social-Network Structure," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 49-95, March.
    5. McPherson, Michael A. & Liedholm, Carl, 1996. "Determinants of small and micro enterprise registration: Results from surveys in Niger and Swaziland," World Development, Elsevier, vol. 24(3), pages 481-487, March.
    6. Dabla-Norris, Era & Gradstein, Mark & Inchauste, Gabriela, 2008. "What causes firms to hide output? The determinants of informality," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 1-27, February.
    7. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    8. Patacchini, Eleonora & Rainone, Edoardo & Zenou, Yves, 2017. "Heterogeneous peer effects in education," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 190-227.
    9. Abid A. BURKI & Uzma AFAQI*, 1996. "PAKISTAN’S INFORMAL SECTOR: Review of Evidence and Policy Issues," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 12(1), pages 1-30.
    10. Williams, Colin C. & Shahid, Muhammad S. & Martínez, Alvaro, 2016. "Determinants of the Level of Informality of Informal Micro-Enterprises: Some Evidence from the City of Lahore, Pakistan," World Development, Elsevier, vol. 84(C), pages 312-325.
    11. Yitzhaki, Shlomo, 1974. "Income tax evasion: A theoretical analysis," Journal of Public Economics, Elsevier, vol. 3(2), pages 201-202, May.
    12. Eguia, Jon X., 2017. "Discrimination and assimilation at school," Journal of Public Economics, Elsevier, vol. 156(C), pages 48-58.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Florencia Verónica Pedroni & Anahí Briozzo & Gabriela Pesce, 2022. "Determinants of unreported income in Latin American companies: a business perspective," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 16(1), pages 58-83.
    2. Roberto Galbiati & Giulio Zanella, 2008. "The Social Multiplier of Tax Evasion: Evidence from Italian Audit Data," Department of Economics University of Siena 539, Department of Economics, University of Siena.
    3. Hashimzade, Nigar & Myles, Gareth D. & Rablen, Matthew D., 2016. "Predictive analytics and the targeting of audits," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 130-145.
    4. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2016. "Networks: An Economic Perspective," Papers 1608.07901, arXiv.org.
    5. Torgler, Benno & Schneider, Friedrich & Schaltegger, Christoph A., 2007. "With or Against the People? The Impact of a Bottom-Up Approach on Tax Morale and the Shadow Economy," Berkeley Olin Program in Law & Economics, Working Paper Series qt6331x6vz, Berkeley Olin Program in Law & Economics.
    6. Puklavec, Žiga & Kogler, Christoph & Stavrova, Olga & Zeelenberg, Marcel, 2023. "What we tweet about when we tweet about taxes: A topic modelling approach," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1242-1254.
    7. Friedrich Heinemann & Martin Kocher, 2013. "Tax compliance under tax regime changes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(2), pages 225-246, April.
    8. Levaggi, Rosella & Menoncin, Francesco, 2012. "Tax audits, fines and optimal tax evasion in a dynamic context," Economics Letters, Elsevier, vol. 117(1), pages 318-321.
    9. Moreno Galbis, Eva & Wolff, Francois-Charles & Herault, Arnaud, 2020. "How helpful are social networks in finding a job along the economic cycle? Evidence from immigrants in France," Economic Modelling, Elsevier, vol. 91(C), pages 12-32.
    10. Casal, Sandro & Mittone, Luigi, 2016. "Social esteem versus social stigma: The role of anonymity in an income reporting game," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 55-66.
    11. Díaz, Carlos & Patacchini, Eleonora & Verdier, Thierry & Zenou, Yves, 2021. "Leaders in juvenile crime," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 638-667.
    12. Cui Zhang & Dandan Zhang, 2023. "Spatial Interactions and the Spread of COVID-19: A Network Perspective," Computational Economics, Springer;Society for Computational Economics, vol. 62(1), pages 383-405, June.
    13. Cãƒtãƒlina Cozmei, 2012. "Playing The Fiscal Lottery Game," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 6(1), pages 511-521, November.
    14. Traxler, Christian, 2010. "Social norms and conditional cooperative taxpayers," European Journal of Political Economy, Elsevier, vol. 26(1), pages 89-103, March.
    15. Laszlo Goerke, 2015. "Income tax buyouts and income tax evasion," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(1), pages 120-143, February.
    16. Basil Dalamagas, 2011. "A Dynamic Approach to Tax Evasion," Public Finance Review, , vol. 39(2), pages 309-326, March.
    17. Jordi Caballé & Ariadna Dumitrescu, 2016. "Disclosure of Corporate Tax Reports, Tax Enforcement, and Insider Trading," Working Papers 911, Barcelona School of Economics.
    18. Orviska, Marta & Hudson, John, 2003. "Tax evasion, civic duty and the law abiding citizen," European Journal of Political Economy, Elsevier, vol. 19(1), pages 83-102, March.
    19. Berger, Melissa & Fellner-Röhling, Gerlinde & Sausgruber, Rupert & Traxler, Christian, 2016. "Higher taxes, more evasion? Evidence from border differentials in TV license fees," Journal of Public Economics, Elsevier, vol. 135(C), pages 74-86.
    20. Uribe-Terán, Carlos, 2021. "Higher taxes at the top? The role of tax avoidance," Journal of Economic Dynamics and Control, Elsevier, vol. 129(C).

    More about this item

    Keywords

    Informality; Tax evasion; Micro and small enterprises; Probit models; Cameroon;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jqecon:v:19:y:2021:i:3:d:10.1007_s40953-021-00239-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.