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Restoring Property rights: The Effects of Land Restitution on access to credit

Author

Listed:
  • Bogliacino, Francesco

    (Universidad Nacional de Colombia)

  • Posso, Christian M
  • Villaveces, Juanita
Abstract
We estimate the causal effect of the Law mandating land restitution to victims of forced displacement in Colombia. We use the timing of the restitution as the source of identification in an event study approach. Farmers typically rely on small to medium-sized loans with limited or no collateral to finance their investments, thus we employ microcredit as our main outcome variable. We analyze administrative data from the program, along with data from the census of credit transactions. Our findings reveal a substantial increase in access to credit, both in terms of the likelihood of signing a loan (extensive margin) and the loan amounts (intensive margin). These effects are most pronounced two years after land restitution, coinciding with the moment individuals gain full property rights. By delving into the specific details of these credit transactions, we ascertain that the credits obtained are primarily directed towards agricultural investments. This suggests that the increased access to credit is likely being used to finance material investments in the restored land parcels.

Suggested Citation

  • Bogliacino, Francesco & Posso, Christian M & Villaveces, Juanita, 2023. "Restoring Property rights: The Effects of Land Restitution on access to credit," SocArXiv ch6mk, Center for Open Science.
    • Handle: RePEc:osf:socarx:ch6mk
    DOI: 10.31219/osf.io/ch6mk
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    References listed on IDEAS

    as
    1. Abhijit V. Banerjee & Esther Duflo, 2010. "Giving Credit Where It Is Due," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 61-80, Summer.
    2. Marcel Fafchamps, 1992. "Cash Crop Production, Food Price Volatility, and Rural Market Integration in the Third World," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 90-99.
    3. Steven Lawry & Cyrus Samii & Ruth Hall & Aaron Leopold & Donna Hornby & Farai Mtero, 2017. "The impact of land property rights interventions on investment and agricultural productivity in developing countries: a systematic review," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 9(1), pages 61-81, January.
    4. Arlen Guarin & Juliana Londoño-Vélez & Christian Posso, 2023. "Reparations as Development? Evidence from Victims of the Colombian Armed Conflict," Borradores de Economia 1236, Banco de la Republica de Colombia.
    5. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 423-423.
    6. Bose, Pinaki, 1998. "Formal-informal sector interaction in rural credit markets," Journal of Development Economics, Elsevier, vol. 56(2), pages 265-280, August.
    7. Sandra F. Joireman & Laura S. Meitzner Yoder, 2016. "A Long Time Gone: Post-conflict Rural Property Restitution under Customary Law," Development and Change, International Institute of Social Studies, vol. 47(3), pages 563-585, May.
    8. Lucas Marín Llanes & Mauricio Velásquez & María Alejandra Vélez, 2022. "Land restitution and selective violence: Evidence from Colombia," Documentos CEDE 20144, Universidad de los Andes, Facultad de Economía, CEDE.
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