Micro and Small Enterprises (MSEs) in Egypt still rely heavily on informal credit. They also rely on informal labor to a great extent. This project examines the relationship between informal credit and the formalization of MSEs, in general, and, in particular, their employment characteristics. To do that, it attempts to find out what effect informal credit has on the performance, risk and return to capital of MSEs and how it affects the employment profile and the use of informal labor. It also looks into whether informal credit provides a disincentive for the formalization of MSEs and whether the sources of informal credit have different effects on the formalization of MSEs.
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