This is a longish academic report, with some nasty math when you get in deep. I suggest you read the abstract, introduction (5 pgs), and conclusion (from pg. 29). The conclusion is remarkable. It seems Greek banks are using informal measures of wealth on which to base lending, rather than tax forms. This is not characteristic behavior for banks. Also interesting is who is doing the tax evading and why reforms are not being instituted. Seems reform needs politicians to vote to tax themselves. Go figure. Greece is a basket case, and I don’t see how it can reform until the Greeks themselves decide to participate. Right now they just seem to worry about their situation. There is no general social-group concern or habit-altering impulse for reform. Normally it would be just another corrupt nation, but this one can still cause contagion, so we watch. From the conclusion: “A final thought concerns the welfare implications of bank issuing of soft credit. Although we are limited in space and data to accomplish a study of welfare, we would like to introduce ideas since the observation of bank adaptation to semiformality is new. In a Coasian or De Soto view of the world, the fact that banks give an entitlement to informal income provides a property right that allows individuals to use borrowing to optimally smooth lifetime consumption or overcome shocks. A negative side is that access to soft credit reduces the costs to informality, but we would be surprised if the negative outweighs the positive in the second best world of a norm of semiformality. "This welfare discussion raises (at least) three points. It would be interesting to study commercial lending under this frame. It would also be interesting to know the extent to the haircut imposed on tax evaded income and to speak to the welfare benefit accruing to borrowers. Finally, the idea that informal income is a property right with entitlement benefits like a farm deed is new and interesting. To our knowledge, soft information has not been documented to increase the size of the lending pie previously, although it most certainly does, in contexts other than soft credit."