Access to Credit in the Developing World: does land registration matter?

Many households and businesses in developing countries are said to face credit constraints which limit their ability to undertake investments in various production-enhancing economic activities required to reduce poverty. This limited access to formal credit is often attributed to the lack of ‘acceptable’ collateral, resulting from the absence of formally registered land titles. Despite the fact that this assertion is fast gaining ground, land registration has not been found empirically to positively influence access to credit. This article seeks to critically examine the above argument and provide credible theoretical explanations as to why previous studies in the developing world have failed to establish any significant positive link between land registration and access to credit. It is argued that formalising property titles alone will not be enough solve the problem of limited access to credit in the developing world.