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The de Soto effect

Timothy Besley () and Maitreesh Ghatak ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: 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.

JEL-codes: P14 K11 (search for similar items in EconPapers)
Date: 2009-04
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http://eprints.lse.ac.uk/25429/ Open access version. (application/pdf)

Related works:
Working Paper: The de Soto Effect (2009) Downloads
Working Paper: The de Soto Effect (2009) Downloads
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