Re-framing Access to Credit
Hernando de Sotto-Soler said that it’s easier for people who have titles to their lands to access credit from banks. This is a better choice than getting credit from informal sources. Banks can give a higher amount, at lesser interest, for a longer repayment period - if the loan is secured by a title. And when people with titles got loans, they would increase the amount of local economic activity - for example, when they use the loan proceeds to open or expand a business, or improve their homes. In a previous project we had been helping people get titles to their lands. So we wondered, are they using their titles to get loans? A rapid check with the LGU Land Information Offices, which were directly involved in the titling process, yielded a negative answer. It turns out people were not using their titles to get loans because, among other things, they didn’t know they could. So we crafted a little theory: if people got more information about how they can use their titles to ge...