Informal finance and formal microfinance. The rationale of their coexistence in the context of urban African financial markets
By: Pierre-Germain Umuhire
Series: Thèses de l'Université catholique de Louvain (UCL) -- 695; Thèses de l'Université catholique de Louvain -- 695
Publisher: Presses Universitaires
Published: 2013
Place of publication: Louvain-La-Neuve
Language: eng
Number of pages: 226
ISBN-13: 9782875581983
Description: This dissertation endeavours to shed light on the paradox of the persistence of informal finance in urban African markets despite the emergence of a vibrant microfinance sector. To do so, it analyses the rationale of the financial choices of the micro-entrepreneurs operating in the markets of Ouagadougou (Burkina Faso). In particular, a careful examination of the motives driving the combinative use of informal and formal microfinance is carried. In order to lay deep theoretical foundations to this analysis, this thesis develops a model describing the financial behaviour of the micro-entrepreneurs in the presence of hyperbolic preferences and social influences. The solution of this model shows, inter alia, that the financial choices are not solely driven by economic motivations but also by social motivations. This result is confirmed by empirical observations which show, among other things, that social relations play an important role in explaining the persistence of informal finance.