This paper investigates the factors that influence formalization of poor micro-enterprises (MEs) in urban locations in Bangladesh and Sri Lanka. The paper draws from a multi-country survey of information and communication needs of poor MEs in Bangladesh, India and Sri Lanka in the second quarter of 2013. Through logistic regression, it models business registration among such MEs to understand what affects the decision to formalize within these environments. The paper also looks at the barriers to registration and the policy implications from these findings.
Using descriptive statistics and models we find that the MEs lack of formalization is explained to a significant level by their level of education, gender, size of the enterprise and awareness levels. These findings are supported in the existing literature on enterprise formalization/registration. One finding (that higher trust in government leads to lower registration rates) in unexpected and needs further investigation.
Microenterprises; bottom of the pyramid ; Bangladesh; Sri Lanka; poor; business registration; formalization