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Property rights, collateral and interest rates. Evidence from Vietnam

Christa Maria Hainz and Alexander Danzer ()

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper investigates the causal effect of the quality of property rights on the price of collateralized consumer loans. Identification stems from exogenous variation in the improvement of property rights in Vietnam following recent accelerations of the land titling program as well as political change in provincial leaderships. We exploit a unique data set which comprises the complete loan data of one of the largest private Vietnamese banks, regional level information on the quality of property rights and legal institutions as well as an exact measure of bank competition derived from the complete relevant georeferenced bank data of Vietnam. Our findings clearly indicate that more secure property rights reduce the cost of credit, and these results are very robust to the inclusion of competition in our regression model. Owing to an institutional peculiarity of the Vietnamese banking practice, we support our findings with a falsification exer-cise on employer-insured loans.

JEL-codes: D23 G21 O16 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ban, nep-sea and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112880

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