【正文】 are important ingredients in the selection process. 4 Informal finance is sometimes taken as synonymous with moneylender activity,but Steel et al(1997)show(for the cases of Ghana,Malawi,Nigeria,and Tanzania)that angels are the most mon informal such loans bear no interest and social and economic ties replace collateral as well as ease enforcement ofthe loan relationship between the borrower and the angel reduces the involved moral hazard and hence the monitoring is not unmon,meaning that the borrower can sometimes bee the lender and vice sengage also in reciprocal lending among themselves,often in order to smooth out shortterm cash flow angels supply longterm isalso possible that firms with excess liquidity“invest”in the informal market by placing an amount for on ,in such instances,the transactions take place at market terms. Moneylenders lend without tying the loans to other moneylender,who,for instance,could be a regular moneylender,a pawnbroker,or an indigenous banker,often has intimate knowledge of the the high interest rates,small and mediumsized firms turn to moneylenders as a“l(fā)ender of last resort”.Because of this,the moneylenders are sometimes in a monopolistic earned rent es from the information advantage that the moneylender has over high interest rates often charged by money lenders are not only amonopoly rent because he also incurs information and transaction the rentalso covers the opportunity cost of holding cash for money lenders being the last instance of credit,Bolnick(1992)argues that moneylenders promptly provide loans to these ,there are low transaction costs and no restrictions on the use of funds. Traders(tied credit)are another fairly mon source of informal supply either inputs or cash advances to firms and the credit is linked to purchases of some product at a highly discounted loans have some advantages pared with other types of loans because they represent a form of collateral that helps reduce uncertainty,moral hazard,and adverse selection(Udry,1990).Loans attached to transactions tend to have lower implicit interest rates and to be of larger size. In ROSCAs,individuals pool their savings on a regular basis to generate loanable funds,primarily for the rotation of access to the funds differs among ROSCAs,but most seem to use lotteries and going into a detailed description of the bidding system,the oute is lending at a market determined interest and monitoring costs of ROSCAs are very low。default rates by the very nature of ROSCAs are low as could be angels as well as traders or manufacturers. Conclusions This paper has studied the extent to which Kenyan manufacturing firms use informal descriptive analysis showed that informal finance constitutes a verysmall proportion of the firms’debt was also shown that it is mainly informal 5 firms that use informal finance,although to some degree also formal firms borrow from informal the latter cases firms tend to be small and have African ,the difference due to ethnicity was too small to show upin the regression analysis. The main reasons for using informal sources of finance were lower interest rates,which are likely to be related to angel financing,easier formalities,and the factthat no collateral is analysis suggested that informal finance isthe last choice of external angels appear to consider the business prospects for the borrowing firm as well as the track record for repayments before providing funding. This paper thus agrees with the conclusions of Biggs et al(1994)that informal finance is limited in results on Kenya appear to stand in stark contrast tothe results obtained by Cuevas et al(1993)for Ghana,who showed that informal finance is of considerable importance to manufactur