Credit access and transferable land rights
AbstractThis paper develops a model in which small landholders earn a return from their land but can increase their income by borrowing funds to invest in a risky project. The model allows us to study the impact of different legal policies governing the use of land as collateral in debt contracts. In this framework, we find that legislation sanctioning the use of land as collateral can sometimes have unintended consequences. In particular, when farmers and banks have asymmetric valuations over land plots, introducing collateral based loans can lead to a reduction in the number of low-risk farmers that choose to borrow funds. This finding offers one explanation for why farmers in countries like Bolivia and Mexico have resisted policies that promise to facilitate the use of land as collateral. Copyright 2004, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 56 (2004)
Issue (Month): 1 (January)
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- Katleen Van den Broeck & Carol Newman & Finn Tarp, 2007.
"Land Titles and Rice Production in Vietnam,"
Discussion Papers, University of Copenhagen. Department of Economics
07-32, University of Copenhagen. Department of Economics.
- Katleen Van den Broeck & Carol Newman & Finn Tarp, 2007. "Land Titles and Rice Production in Vietnam," Trinity Economics Papers, Trinity College Dublin, Department of Economics tep1207, Trinity College Dublin, Department of Economics.
- Fort, Ricardo & Ruben, Ruerd, 2006. "Land Inequality and Economic Growth: A Dynamic Panel Data Approach," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia, International Association of Agricultural Economists 25582, International Association of Agricultural Economists.
- Ricardo Fort, 2007. "Land inequality and economic growth: a dynamic panel data approach," Agricultural Economics, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 37(2-3), pages 159-165, 09.
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