The framework builds upon the well-tested conceptual framework that links landownership security to farm productivity. It is constructed with five linkages, to map the relationship between land registration and financial development and economic growth, namely: (i) the land tenure security and investment incentives linkage; (ii) the land title, collateral and credit linkage; (iii) the land markets, transactions and efficiency linkage; (iv) the labor mobility and efficiency linkage; and (v) the land liquidity, deposit mobilization and investment linkage. The second and last linkages play a primary role in the land registration/financial development relationship although they are also important in enhancing investment which is essential for economic growth; the first, third and fourth linkages play a primary role in the land registration/economic growth relationship although they also play an important role (particularly the third linkage) in financial development.

# **III. Specification and Testing of the Econometric Model**

In this section, we specify an econometric model necessary to estimate the effects of land registration on financial development and economic growth. We have two equations to specify and estimate: the financial development equation; and the economic growth equation. In each of the equations, land registration enters as an explanatory variable accompanied by control variables. Given the two-way relationship that links the development of the financial and real sectors of the economy as articulated in the finance and growth literature (Levine, 1996), the financial development equation would have to include a real GDP per capita variable while the economic growth equation would similarly incorporate a financial development variable. The specification approach being followed here for the financial development equation is similar to the one used by Demetriades and Luintel (1996) in their study of the effects of banking policies on financial development in Nepal. But, unlike their study, ours does not investigate short run and long run interactions between financial deepening and economic growth: we only assume the existence of the interactions and, on that basis, proceed to include financial deepening and economic growth variables in the economic growth and financial deepening equations, respectively.

The specification and estimation of the econometric model is based on time series data for Thailand for the period 1960-1996. We do not include 1997 and 1998 in our analysis partly because the required data is not available; in addition, the Asia financial crisis has hit Thailand and created so much economic and social disruption to the extent that it would only be prudent to analyze the 1997-98 period separately as a special case.

# **(a) Specification of the Relationship Between Land Registration and Financial Development**

It has already been argued that land registration is primarily linked to financial development through two channels: the role played by land registration in enabling land to become a collateral asset which enhances financial development by expanding the market base (the number of credit worthy borrowers) for loans and by reducing financial 4