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What is Family and Friends in Informal Finance about?

This document summarizes a research paper about financing from family and friends. It makes two key points: 1) Family finance is often cheaper than formal finance, yet entrepreneurs still prefer and exhaust formal options first due to "shadow costs" of family financing. Using family money can undermine familial insurance arrangements and crowd out transfers in low-income states. 2) The characteristics that make family finance good for insurance, like altruism between relatives, are the same ones that mak

Author

KaterinaMoloni

Language

EN