give 5 disadvantages of informal sector
Disadvantages of informal sector are:
a. It charges high rate interest. Informal sectors make loans very expensive as they are no external organizations controlling the credit activities of lenders.
b. Informal sector involves high degree of risk.
c. Lenders may exploit the borrowers , they may engage in threats , intimidation to ensure repayment of loans.
d. There is no written agreement between the lender and the borrower.
e. There is no legal recourse in case of informal sources of credit.
a. It charges high rate interest. Informal sectors make loans very expensive as they are no external organizations controlling the credit activities of lenders.
b. Informal sector involves high degree of risk.
c. Lenders may exploit the borrowers , they may engage in threats , intimidation to ensure repayment of loans.
d. There is no written agreement between the lender and the borrower.
e. There is no legal recourse in case of informal sources of credit.