Does the quality of land records affect credit access of households in India?


Does the quality of land records affect credit access of households in India?, Susan Thomas and Diya Uday, xKDR Working Paper 1, February 2021


Under-utilisation of land as collateral for loans is often attributed to the poor quality of the land records infrastructure, which is seen to both increase the cost of closing credit transactions and the risk in collection if a loan fails. In this paper, we examine the link between the heterogeneity of the quality of the land records infrastructure across states and the access to credit by households in these states using two new data-sets for the analysis. The state-level variation in land record quality is measured using the NCAER Land Records Services Index score while the Consumer Pyramids household data is used to capture household borrowing. Our findings are that there is a weak link between the borrowing patterns of households and quality of land records infrastructure, particularly the availability of spatial records. However, it does not appear that this is sufficient to capture the extent to which households are able to access credit from formal financial sources.

This paper is part of the Financial Inclusion Measurement project in partnership with Dvara Research.


Research paper