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Antichresis leases: Theory and empirical evidence from the Bolivian experience

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  • Navarro, Ignacio
  • Turnbull, Geoffrey K.

Abstract

The antichresis lease in civil law countries requires a lump sum tenant payment which is returned when the lease ends. The custody of the lump sum is the property owner's compensation. We present a theory of leases that emphasizes tenant liquidity risk and owner input moral hazard. Monthly rent leases dominate when tenant consumption depends importantly on owner supplied inputs. However, the antichresis insulates owners from tenant liquidity risk while rent contracts do not, making antichresis leases more attractive for tenant populations with greater liquidity risk. The empirical evidence from Bolivian property leases is consistent with the main model predictions.

Suggested Citation

  • Navarro, Ignacio & Turnbull, Geoffrey K., 2010. "Antichresis leases: Theory and empirical evidence from the Bolivian experience," Regional Science and Urban Economics, Elsevier, vol. 40(1), pages 33-44, January.
    • Handle: RePEc:eee:regeco:v:40:y:2010:i:1:p:33-44
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    Cited by:

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    5. Jihwan Kim, 2018. "Dissonance between formal and informal housing capital: The case of Korea," Environment and Planning A, , vol. 50(6), pages 1171-1188, September.
    6. Kyung-Hwan Kim & Chang-Moo Lee & Young-Man Lee, 2014. "Rental housing system and housing market volatility: monthly rent-based vs. asset-based systems," Chapters, in: Susan Wachter & Man Cho & Moon Joong Tcha (ed.), The Global Financial Crisis and Housing, chapter 12, pages 296-312, Edward Elgar Publishing.
    7. Moon, Byunggeor, 2018. "Housing investment, default risk, and expectations: Focusing on the chonsei market in Korea," Regional Science and Urban Economics, Elsevier, vol. 71(C), pages 80-90.
    8. Park, Sung Sik & Pyun, Ju Hyun, 2020. "Between two extreme practices of rent-only and deposit-only leases in Korea: Default risk vs. cost of capital," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    9. Fikri R. Arrachman & Riatu M. Qibthiyyah, 2018. "The Relationship of VAT Rate and Revenues in the Case of Informality," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 64, pages 73-96, Juni.
    10. Ignacio Navarro & Geoffrey Turnbull, 2014. "Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters," The Journal of Real Estate Finance and Economics, Springer, vol. 49(1), pages 1-22, July.

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