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The Policy Research Working Paper Series examines the effects of the COVID-19 pandemic on informal firms in South Asia. The study uses three rounds of data from the Business Pulse Survey and finds that the severity of the impact and recovery speed are strongly associated with the degree of informality. External factors such as size, sector, age, and gender of the owner do not explain the depth of the impact, while internal characteristics such as poor management capabilities and education of the manager and owners are strong predictors.