The Effect of Ownership Rights on Urban Households’ Access to Credit in Lahore

Land titling and ownership rights have recently been advocated in policycircles as a powerful tool for poverty reduction. The lack of formal titlingprevents the use of property as collateral, and hence prevents the capitalembedded in these assets from being "unlocked." Some studies show a fairlyinsignificant relationship between informal loans and property rights, whileothers indicate a significant positive relationship between formal loans (creditcards, bank loans, etc.) and land ownership. The objective of this article is to lookat the impact of owned titled land on formal and informal loans among urbanhouseholds in Lahore. Here, formal loans are seen in terms of bank loans andcredit cards while informal loans are characterized as loans taken from relatives,friends, or local moneylenders. The findings suggest that land ownership has apositive and significant relationship with formal loans but no relationship witheither bank loans or informal loans alone.