A "de Soto Effect" in Industry? Evidence from the Russian Federation

The strengthening of land rights has been proposed as a policy to reduce financial market frictions and promote private investment in low- and middle-income countries. But assessments of these potential effects have proven inconclusive. One reason may be that research has focused on actors that face difficulties accessing credit for reasons other than the security of land tenure. We explore the effect of greater tenure security in a setting in which non-land-related financial market frictions are apt to be mildthat is, among large urban industrial enterprises. Exploiting policy variation across Russian regions and firm-level survey data, we show that private land rights facilitate credit access and promote investment.