A 'De Soto Effect in Industry? Evidence from The Russian Federation

33 Pages Posted: 23 Nov 2012

See all articles by Alexei Karas

Alexei Karas

Utrecht University, University College Roosevelt; Utrecht University School of Economics; Centre for Russian International Socio-Political and Economic Studies (CERISE)

William Pyle

Middlebury College - Department of Economics

Koen J. L. Schoors

Ghent University - Centre for Russian International Socio-Political and Economic Studies (CERISE); Ghent University - Department of General Economics

Date Written: November 22, 2012

Abstract

The empirical literature assessing the connection between land rights, access to finance and investment activity has focused largely on actors that, for multiple reasons, might face difficulties accessing credit. Communities of small-scale farmers or poor urban households in developing countries, that is, may not be the best place to look for evidence as to whether more secure land rights are sufficient to facilitate borrowing by providing borrowers with a collateralizable asset. We explore this relationship in a setting in which financial market frictions are apt to be less severe – i.e., among large, urban, industrial enterprises. Exploiting policy-induced variation across Russian regions, we use recently-collected survey data to show that private rights to land do indeed facilitate access to external financing and promote investment. This finding is supplemented by additional survey evidence that points to private land serving as an important source of collateral.

Keywords: industrial land, property rights, Russia, collateral

Suggested Citation

Karas, Alexei and Pyle, William and Schoors, Koen J. L., A 'De Soto Effect in Industry? Evidence from The Russian Federation (November 22, 2012). Higher School of Economics Research Paper No. BRP 19/EC/2012 , Available at SSRN: https://ssrn.com/abstract=2179541 or http://dx.doi.org/10.2139/ssrn.2179541

Alexei Karas

Utrecht University, University College Roosevelt ( email )

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William Pyle (Contact Author)

Middlebury College - Department of Economics ( email )

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Koen J. L. Schoors

Ghent University - Centre for Russian International Socio-Political and Economic Studies (CERISE) ( email )

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Ghent, 9000
Belgium
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+32 9 265 35 99 (Fax)

Ghent University - Department of General Economics ( email )

Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 264 35 99 (Fax)

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