# **1. Introduction**

Even though the Coasian world of neoclassical economics departs from existence of well-defined property rights that can be enforced at no cost, it is increasingly recognized that in practice establishment and maintenance of institutions to define such rights and make information on them available freely is an important public sector role. Such institutions are generally believed to affect economic outcomes through three mechanisms, namely (i) the incentives to exert effort and make investments; (ii) the scope for separating ownership of an asset from its control; and (iii) the potential for financial market development (Besley and Ghatak 2008). The fact that, in many developing economies, formal land rights are largely absent has led influential observers to argue for acceleration of land titling to help transform large amounts of ‘dead assets’ into ‘live capital’ and provide the preconditions for emergence of a financial sector (de Soto 2000). However, despite a strong belief in the credit-enhancing impacts of property institutions, empirical evidence in support of such effects remains scant and sometimes non-existent even where programs had initiated with the express purpose of increasing credit access.

To explore the effect of improved functioning of property registries on credit access, this paper analyzes the impact of the _C_ omputer- _A_ ssisted _R_ egistration of _D_ eeds program (CARD) that computerized land registration in the Indian state of Andhra Pradesh (AP). In contrast to traditional titling programs that focus on adjudicating rights on the ground for the first time, this intervention reduced the cost of registering transactions for owners and that of accessing information on property rights, especially for lenders. At the same time, it affected neither the quality of the information maintained in land registries nor the institutional structure of land administration. Any potential benefits will thus be limited to those already in the formal system or able to join it at low cost. This makes such reforms of limited interest if property registries are non-existent, have limited outreach, or are not already used by banks. At the same time, registry reform is amenable to the innovative use of information technology, an area which India has pioneered and the impact of which remains controversial and not well documented empirically. An evaluation of simple procedural reform that stops short of more far-reaching institutional changes or rights determination as such measures have recently gained currency, in large part supported by initiatives such as ‘doing business’ (World Bank 2009). Proponents of such an approach argue that a focus on ‘low hanging fruit’ can create political momentum for more far-reaching reforms by demonstrating producing tangible benefits quickly (Djankov and McLiesh 2007). Opponents retort that focus on a very simplified set of indicators without consideration of the channels through which effects materialize, the quality of the underlying information, and the outreach of the concerned institutions could result in windowdressing that, instead of acting as a stepping-stone towards broader reform, may obfuscate and obscure the real issues (Arrunada 2007).

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