information and greater benefits from more formal systems of land ownership recording. If the ability to liquidate investments (through land transfers) increases the incentive to undertake such investments, higher levels of transfer rights, and the greater ability to affect transfers which is entailed in formal land rights systems, will not only improve resource allocation but will also be associated with higher levels of investment and labor use by individual cultivators.

The only data that allow testing of this hypothesis come from China where one observes variability in systems of transfer rights in different communities (Carter and Yao, 1998). Results suggest that higher levels of transfer rights increase investment (application of green manure). In addition, evidence from China indicates that higher levels of transfer rights also induce a better allocation of the households labor endowments in response, for example, to outside employment opportunities. Households with higher levels of transfer rights apply less labor on their farm and devote more time to more remunerative offfarm activities (Yao 1998), thereby contributing to equalization of factor ratios within a village and increasing overall efficiency. More indirect support for an important efficiency-increasing (but not investment enhancing) impact of higher transfer rights is provided by Rozelle et al. (1997) who find that an increase in off-farm opportunities narrowed the difference between labor spent on (transferable) private and (non-transferable) communal plots.<sup>13</sup>

# _Credit access_

In addition to inducing investment, secure land ownership is likely to increase the supply of credit from the formal credit system to undertake such investment. The reason is that, because of its immobility and virtual indestructibility, land with secure, clearly defined, and easily transferable ownership rights is an ideal collateral. The provision of a collateral -facilitated by possession of formal land title- is generally a necessary condition for participation in formal credit markets for medium and long-term credit. In fact, there is evidence of titles facilitating access to informal (but impersonal) credit markets as well (Siamwalla et al., 1993). Existence of well documented and transferable property rights and of institutional arrangements to facilitate the low-cost transfer of land are likely to make an important contribution to the development of financial markets.

However, while use of titled land as collateral can, under the condition that foreclosure is socially feasible, reduce a bank's default risk and thereby enhance credit supply, it will have little impact on the working capital emerged as being an important determinant, and that the subjective measure of tenure security used by them is more noisy than the index of land tenure security used by Yao.

> '" Evidence is not uniform: for Ghana, the hypothesis that sales and rental rights do not have a significant impact on investnent decisions can not be rejected (Besley 1995). This suggests that the prospect of being able to transfer land more easily through sales and rental markets in the future is, in this environment, not an important consideration in individuals' decision to effect land-related investment.

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