Reforming Collateral Laws to Expand Access to Finance

Fleisig, Heywood; Safavian, Mehnaz S.; Peña, Nuria de la

doi:10.1596/978-0-8213-6490-1

Cited by 43 publications

(29 citation statements)

References 1 publication

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“…In the developing world especially, a lot of emphasis has been placed on the lack of collateral in trying to explain the existence of this financing gap. For instance, an estimated 51% of all firms refused credit in Africa is said to be attributable to insufficient collateral; in East Asia, Eastern Europe and Central Asia, Latin America and the Caribbean as well as South Asia, the estimates stand at 70%, 72%, 39% and 72% respectively (Fleisig, 2006).…”

Section: Soto In His Book the Mystery Of Capital: Why Capitalism Trimentioning

confidence: 99%

Secure property right as a determinant of SME’s access to formal credit in Ghana: dynamics between Micro-finance Institutions and Universal Banks

Domeher

Abdulai

Yeboah

2016

Journal of Property Research

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Does registered land title help to improve tenure security and enhance one's chances of securing a loan from formal financial institutions? This question continues to sharply divide opinions among academics, policy makers and international development partners. The long running debate on the subject of 'Property in the Commons', which serves as the ideological origin of what has become known as 'Washington Consensus' in contemporary times claims that there is positive correlation between the possession of registered land title and access to credit. However, this has often received considerable rebuttals. Even if the 'Washington Consensus' is accepted, the argument is still laced with some fundamental difficulty because it inherently assumes and treats financial institutions as a homogenous class of business. Yet financial institutions exhibit greater diversity in their operations and decision making process. This paper attempts to contribute towards developing improved understanding between the 'secure land title and access to credit relationship' by disaggregating financial institutions into Micro Finance and UniversalBanks and examining what role secure land title play in granting credit from the perspectives of these two categories of financial institutions. To achieve this, field level investigations were conducted amongst officials of both Microfinance Institutions (MFIs) and Universal Banks in Ghana using structured questionnaires. A total of 200 questionnaires -100 each to MFI and Universal Banks were administered of which a response rate of 51 and 57 was respectively achieved. The data was analysed using various non-parametric statistics. The study amongst other things established that universal banks and MFIs differ in their opinions on how important secure titles are in the lending process and the nature of the influence they can exert on the final lending decision. It was established that both categories of lenders do regard secure titles as important but whether or not it will influence their decision to accept a given landed property as collateral varies across lender types.

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Section: Soto In His Book the Mystery Of Capital: Why Capitalism Trimentioning

confidence: 99%

Secure property right as a determinant of SME’s access to formal credit in Ghana: dynamics between Micro-finance Institutions and Universal Banks

Domeher

Abdulai

Yeboah

2016

Journal of Property Research

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“…For instance, apart from the collateralisation process in many developing countries being complex, the liquidation process is also time consuming and costly (Menkhoff et al, 2003). Whenever the legal framework complicates or delays the process of creating, repossessing or sale of collateral and enforcing collateral agreements, the economic value of the collateral asset is affected and this may renders such assets less acceptable by lenders (Fleisig et al, 2006). Fleisig et al (2006) identify three main stages in the collateral enforcement process which may be a big hindrance to lenders.…”

Section: Supply-side Channelmentioning

confidence: 99%

“…Whenever the legal framework complicates or delays the process of creating, repossessing or sale of collateral and enforcing collateral agreements, the economic value of the collateral asset is affected and this may renders such assets less acceptable by lenders (Fleisig et al, 2006). Fleisig et al (2006) identify three main stages in the collateral enforcement process which may be a big hindrance to lenders. First, on default of a loan, the lender files a court complain and the borrower is given time by the court to respond.…”

Section: Supply-side Channelmentioning

confidence: 99%

Land registration, credit and agricultural investment in Africa

Domeher

Abdulai

2012

Agricultural Finance Review

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Purpose -The purpose of this paper is to critically examine the argument linking land registration to agricultural investment and to provide theoretical reasons as to why this linkage may not materialise in Africa within the short to medium term. Design/methodology/approach -The paper takes the form of a critical review of the relevant literature on land registration, access to credit and agricultural investment; arguments are built on empirical studies found in the literature and theoretical concepts. Findings -It has been established in this paper that the links between landed property registration and agricultural investments are made defective in Africa by factors such as poverty, lack of appropriate agro-based infrastructure and the fact that land registration per se does not improve the profitability of agriculture, neither does it improve access to credit. Research limitations/implications -The fact that this paper is based on literature review may be seen as a weakness to some extent. Originality/value -Even though previous researchers have looked at the relationship between landed property registration and agricultural investment in the developing world, they fall short of critically explaining why land registration has been found not to enhance agricultural investment. This paper fills the gap through a combination of various theoretical and practical arguments which could call for a rethinking on the policies for promoting agricultural growth. The rigorous theoretical argument may also provide the basis for further empirical research.

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“…Though credit constraint could be cause by a wide range of factors, there is often a strong attribution to the lack of collateral. An estimated 51% of all firms refused credit in Africa is as a result of insufficient collateral; in East Asia, Eastern Europe and Central Asia, Latin America and the Caribbean as well as South Asia, the estimates stand at 70%, 72%, 39% and 72% respectively; In addition, 19% of people who don't apply for credit in Africa do so because of the high collateral requirements (Fleisig, 2006).…”

Section: Introductionmentioning

confidence: 99%

Land registration and access to SME credit: preliminary findings

Domeher¹,

T²

2012

Proceedings of the 19th Annual European Real Estate Society Conference - Edinburgh, Scotland

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Land registration has assumed popularity around the developing countries for quiet sometime; the argument that it is capable of enhancing access to credit is often the underlying factor for implementing land registration programs. Several studies in the developing world have not found any significant relationship between land registration and access to credit. The aim of this paper is to establish whether or not the absence of registered land titles is a barrier to credit access amongst small enterprises in Ghana. The study involved credit officers and the results amongst other things show that as far as the main stream commercial banks are concerned, landed property is not eligible for use as collateral unless it is formally registered. Unregistered property is however accepted as collateral by the microfinance institutions. Therefore the exact impact of land registration on credit access may vary depending on the type of lender.

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Reforming Collateral Laws to Expand Access to Finance

Cited by 43 publications

References 1 publication

Secure property right as a determinant of SME’s access to formal credit in Ghana: dynamics between Micro-finance Institutions and Universal Banks

Secure property right as a determinant of SME’s access to formal credit in Ghana: dynamics between Micro-finance Institutions and Universal Banks

Land registration, credit and agricultural investment in Africa

Land registration and access to SME credit: preliminary findings

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