Land Reforms in Developing Financial Markets: Lessons from England's Land Enclosures 1750-1830

Land titling is expected to expand credit by making land pledgeable, but isolating this collateral channel empirically is difficult. We utilize English enclosures from 1750-1830 as a laboratory: privatization of "common waste" created newly mortgageable land, in contrast with "open-field" enclosures which largely reorganized already titled arable land. A stylized model with endogenous default predicts that an influx of newly pledgeable waste land lowers equilibrium collateral requirements, generating a local credit expansion but an increase in bankruptcies. Using a newly digitized universe of personal bankruptcies from the London Gazette, we find that the enclosure of common waste led to higher bankruptcies, particularly in industrial areas and during downturns. Bankruptcies are concentrated among industrial occupations with tight cash-flow cycles. In contrast, enclosures of open-field reduce bankruptcies. The results clarify a key collateral channel through which property reforms can deepen credit while increasing defaults.