The Informal Financial Sector in Nigeria: Characteristics and Relationship with the Formal Sector

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Periodical article

Title:	The Informal Financial Sector in Nigeria: Characteristics and Relationship with the Formal Sector
Author:	Soyibo, Adedoyin
Year:	1997
Periodical:	Development Policy Review
Volume:	15
Issue:	1
Period:	March
Pages:	5-22
Language:	English
Geographic term:	Nigeria
Subjects:	credit informal sector Economics and Trade Development and Technology Labor and Employment
External link:	https://doi.org/10.1111/1467-7679.00023
Abstract:	Formal interventions in the provision of credit in Nigeria aimed at improving the access of rural dwellers to credit have been bedevilled by a multiplicity of problems. However, in the same environment, credit from informal sources has performed better, particularly in exhibiting very low loan default rates. This paper provides an understanding of the workings of the informal financial sector in Nigeria, particularly its origin, loan screening, administration and contract enforcement mechanisms, in order to formulate appropriate interventions aimed at promoting the integration of the formal and the informal sector. It examines the issue of whether the operations, performance and continued existence of the informal sector are due to inappropriate official policies, particularly those of financial repression, and whether liberalizing the formal sector will diminish the role of the informal sector. One of the conclusions is that the financial repression hypothesis cannot fully explain the origin and continued existence of informal finance. Bibliogr.