Bringing the underground economy into the official economy through financial channels

Abstract

This article explores financial mechanisms as a strategic tool for integrating the underground economy into
the formal economic system. The informal or shadow economy, although frequently viewed negatively, constitutes a
substantial portion of economic activity particularly in developing countries. Integrating these unregulated sectors via
financial instruments such as digital banking, tax incentives, mobile payment platforms, and inclusive financial regulations
can enhance national productivity, increase tax revenue, and promote financial stability. The study examines international
best practices and innovative policy approaches to bringing unregistered economic actors into the formal financial
landscape.