ABSTRACT
The individual country studies mention the informal financial sector, if at all, only to consider whether it is an obstacle to government monetary policy. However, it is a major provider of financial services, in these and in all developing countries, at least to some sectors. The Asian Development Bank ( 1990) in a path-breaking comprehensive survey of its role gathered estimates of the share of informal credit (some are quoted in Table 11.1). The fact that informal sectors exist, and are believed to be of major quantitative importance, suggests that there is a broad demand for financial services and an effective one, in the sense that it can offer an acceptable return to entrepreneurs, even if not to the formal banking and financial sectors. In considering the impact on monetary policy, we must add to this the major role in some countries (Kenya, for example) of the non-bank, but still 'formal', financial institutions.
