The de Soto Effect
Timothy Besley () and
Maitreesh Ghatak ()
No 7259, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This 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.
Keywords: collateral; credit markets; Hernando de Soto (search for similar items in EconPapers)
JEL-codes: G20 G28 K11 O16 (search for similar items in EconPapers)
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Working Paper: The de Soto Effect (2009)
Working Paper: The de Soto effect (2009)
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