The de Soto Effect

Timothy Besley and Maitreesh Ghatak

STICERD - Economic Organisation and Public Policy Discussion Papers Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: This paper explores the consequences of creating and improving property rights so thatfixed assets can be used as collateral. This has become a cause célèbre of Hernando de Sotowhose 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 thelogic of the argument for credit contracts, both in isolation, and in market equilibrium. Weshow that the impact will vary with the degree of market competition. Where competition isweak, it is possible that borrowers will be worse off when property rights improve. Wediscuss the implications for optimal policy and the political economy of policy reform.

Date: 2009-04
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Citations: View citations in EconPapers (12)

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https://sticerd.lse.ac.uk/dps/eopp/eopp08.pdf (application/pdf)

Related works:
Working Paper: The de Soto Effect (2009)
Working Paper: The de Soto effect (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stieop:008

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