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Preprints, Working Papers, ... Year : 2020

The impact of the formal employment contract on credit access in Africa

Abstract

Utilizing a new database of over 200 employees surveyed in Senegal, we demonstrate the impact of formalization and employment contracts on credit access. Through a probit model, we show that formalization has a significantly positive impact on credit access since an employee's probability of accessing credit increases by 23% if they have a formal employment contract. The possession of an employment contract increases the likelihood of having a bank account by 18%. We find that other potential determinants studied in the existing literature, such as gender, education and salary, do not have a significant impact on access to credit. These results highlight the impact of formalization on credit access and make a strong case for the economic development that could result from a continuation of the efforts being undertaken to formalize African economies, which still remain predominantly informal.
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Dates and versions

hal-02493388 , version 1 (27-02-2020)

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  • HAL Id : hal-02493388 , version 1

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Samuel Monteiro. The impact of the formal employment contract on credit access in Africa. 2020. ⟨hal-02493388⟩

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