The de Soto Effect
AbstractThis paper explores the consequences of creating and improving property rights so that fixed assets can be used as collateral. This has become a cause célèbre of Hernando de Soto whose views are influential in debates about policy reform concerning property rights. Hence, we refer to the economic impact of such reforms as the de Soto effect. We explore the logic of the argument for credit contracts, both in isolation, and in market equilibrium. We show that the impact will vary with the degree of market competition. Where competition is weak, it is possible that borrowers will be worse off when property rights improve. We discuss the implications for optimal policy and the political economy of policy reform.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7259.
Date of creation: Apr 2009
Date of revision:
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Other versions of this item:
- Timothy Besley & Maitreesh Ghatak, 2009. "The de Soto Effect," STICERD - Economic Organisation and Public Policy Discussion Papers Series 008, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-25 (All new papers)
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by Economic Logician in Economic Logic on 2009-10-23 14:01:00
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