of such benefits will depend on the reduction in enforcement efforts afforded by formal recognition, the availability of investment opportunities, skill differences among local land owners, and the incidence of formal or informal land rights before the intervention. Benefits will normally be larger in cases where potential for land-related investment is high, tenure has been insecure or affected by conflict, and where documentation generated will be respected and affect behavior by third parties. Positive impacts of more secure land tenure on investment and land values in rural areas have been demonstrated in China (Jacoby _et al._ 2002), Thailand (Feder _et al._ 1988), Latin America (Bandiera 2007), Eastern Europe (Rozelle and Swinnen 2004), and Africa (Deininger and Jin 2006, Goldstein and Udry 2008). In urban areas, efforts to enhance tenure security have led to increased levels of self-assessed land values (Lanjouw and Levy 2002), greater investment in housing (Galiani and Schargrodsky 2005), and female empowerment (Field 2005). Receipt of titles has allowed former squatters, especially women, to join formal labor markets instead of staying at home to guard their land, thereby increasing their income and reducing child labor (Field 2007). Joint titles are credited with having helped to reduce fertility and increase investment in children’s human capital (Galiani and Schargrodsky 2004). In Vietnam, awarding certificates is estimated to have prompted higher investment in perennials and prompted households, especially the poor, to spend more time in non-agricultural activities (Do and Iyer 2008).

Even if land rights are defined on the ground, improving access to such information through improved functioning of land registration can have positive effects on credit access. The reason is that availability of reliable information on land ownership at low cost via a public registry without the need of physical inspection or inquiry with neighbors reduces the cost of exchanging land in formal markets and provides the basis for low-cost use of land as collateral for credit.<sup>1</sup> Provision of credit is risky because uncertainty and asymmetric information lead to credit rationing in equilibrium and reduced lending volumes compared to a world of perfect information (Stiglitz and Weiss 1981). The use of collateral is a universal practice to reduce the extent of credit rationing and improve welfare. Its immobility and relative indestructibility make land ideal collateral. However, banks’ ability to use it for this purpose on a large scale is contingent on a formal and low-cost way to unambiguously ascertain land ownership or the absence of other encumbrances for a specific plot (Arrunada 2009). With no other obstacles to the functioning of land and financial markets, reliable land registries can thus help to increase credit access. As this will allow borrowers to obtain funding for projects the true risk of which is less than what lenders would assume without collateral, it can increase the level of investment and improve economic efficiency. In such situations, formalizing land tenure can encourage financial market development and use of financial instruments that draw on the abstract representation of property by formal titles (de Soto 2000).

> 1 The large differences in the ratio of credit to GDP across countries is used as a key argument to justify interventions to formalize land rights that could then allow greater use of land as a collateral to access credit (Besley and Ghatak 2008, de Soto 2000).

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