Intensity of Informal Competition among Firms in Ethiopia

Abstract

The study investigated intensity of informal competition among firms in Ethiopia and predicted the level and nature of this competition. The study found that prevalence of highest corruption, tax rates, financial constrained are found to be positively and significantly affecting competition against informal firms in Ethiopia.  On the contrary, firm size found to be negatively and significantly affecting competition against informal firms. Similarly, the study revealed that tax regulation and inspection enforcement conducted by tax officials could not save firms from informality. Even if most research indicated that increase in government enforcement on tax code lead to reduce informality, however in this research it is required further study as to how tax code inspections and regulation could not bring negative result on informal competition

Keywords: intensity of informal competition, binary probit and econometric model

DOI: 10.7176/RJFA/12-19-01

Publication date:October 31^st 2021