ABSTRACT
This chapter examines linkages between the formal and informal sectors of the financial market in each of the sample countries. Our flow of funds analysis (Chapter 4) has shown that interaction within the formal financial sector in these economies has primarily taken place through central banks or the passive use of commercial bank deposit facilities. At the same time, interactions within the informal sector are seldom observed because of the socially and geographically confined nature of such operations. In this chapter, we shall focus on interactions between formal and informal financial sectors. In particular, we will assess the benefits from such flows, and finally look into trends in these relationships after liberalization.
