Abstract
Informal settlements in developing countries' cities are becoming more and more widespread. The city of Burayu is no exception to this trend. To address the challenges involved, it is important to understand the reasons for the prevalence and perseverance of informal settlement. However, there is a lack of institutional and actor perspectives to investigate the process and factors driving the growth of informal settlement in Burayu city. This study investigates the process and precipitating factors underlying the growth of informal settlements based on institutions, structure and agency and social non-compliance perspectives. Primary data for this study were gathered via key informant interviews, questionnaires, and observations. Secondary data were obtained from the empirical data. This study revealed that local informal institutions such as social networking play a crucial role in the growth process of informal settlement by fostering an informal written contract of sale. The study also identified rural-urban migration, speculation, locational choice, and lack of good governance as precipitating causes for the growth of informal settlement. In addition, actors use formal institutional loopholes to engage in informal buildings. Therefore, along with government structure ineffectiveness, the behavior of informal actors' was also identified as an important, albeit often neglected, factor in the growth of informal settlements. Identifying the impact of various informal actors' behaviors on the proliferation of informal settlements is vital not only for improving relationships among actors but also for introducing relevant institutions to control informal actors to improve land governance.