Essays on Property Rights Institutions and Financial Inclusion

In this dissertation, I explore issues surrounding the role of property rights institutions on regional economic development and the financial inclusion of vulnerable populations. In the first chapter, I examine the role of property rights on land use decisions and disparities in modern socioeconomic outcomes in Appalachia. I use historical variation in the court-assigned property rights of surface and mineral owners following a shock in mining technology to study how property rights institutions affected resource allocation, technology adoption, and long-run outcomes in the region. My results suggest that the historical variation in property rights institutions in Appalachia affected resource allocations and had persistent consequences for surface property owners. Using a spatial regression discontinuity, I find 3.5 times greater exposure to surface mining in states where surface owners were not able to exclude mineral owners from using surface mining without their consent, despite similarities in underlying coal characteristics. I also find that historically weaker surface property rights resulted in 31% lower residential property values today—decades after the legal precedents that affected local property rights institutions were overturned. These results suggest that even temporary shocks to property rights institutions can have negative impacts on long-run outcomes. This work has important policy implications for the effect of property rights institutions on natural resource extraction in developing countries where property rights are often incomplete or poorly enforced and for extractive industries, such as hydraulic fracturing, where technological advancements can create ambiguity in existing property rights and liability for damages.

In my second chapter, coauthored with Stephanie Ben-Ishai, Zachary Irving, Sheisha Kulkarni, and Avantika Prabhakar, I examine the extent to which bankruptcy filing costs delay and/or deter Canadian debtors from filing for insolvency. By relieving individuals from crippling debt, bankruptcy has been shown to increase home ownership, annual earnings, employment, and entrepreneurship. In addition to improving filers’ future financial outcomes, bankruptcy may also improve psychological well-being by relieving financial stress. However, despite the benefits that insolvency offers, many debtors lack access to bankruptcy due to costs, technological barriers, and stigma. We conduct, to our knowledge, the first randomized controlled trial (RCT) to examine whether lowering the financial barriers to insolvency improves access to this important financial institution. In partnership with a licensed insolvency trustee (LIT) in Canada, we randomly subsidize potential filers with $1,000 toward bankruptcy or consumer proposal filing fees. A separate treatment arm will offer debtors a surprise subsidy after they have decided to file so that we can separately identify income effects from the economic effect of lowering the financial barrier to access bankruptcy. We also use moment-to-moment experience sampling and sub-clinical questionnaires to track participants’ sense of bankruptcy stigma and mental health throughout the filing process to determine whether debt relief improves well-being by relieving financial stress. Using pilot study collected since December 2024, I present preliminary findings that the $1,000 filing subsidy increases the probability that qualified debtors file for insolvency by 13.6 percentage points, which suggests that cost is likely a barrier to access for many individuals who would benefit from filing for insolvency.

The final chapter examines whether strengthening residential property rights can promote financial inclusion of new title holders in South Africa. Property rights are crucial for economic growth, yet a majority of households in developing countries still have insecure property rights over their land and residences. Weak property rights in developing countries can serve as a barrier to accessing formal credit systems by limiting households’ ability to use their properties as collateral. In South Africa, many urban and peri urban residential properties remain in the ownership of local municipalities because nonwhite residents were not permitted ownership of these properties under the apartheid regime. Residents have occupation rights but not full ownership rights and no way to collateralize their largest asset. Since 2012, a nonprofit titling program has been facilitating the transfer of properties from municipality ownership into ownership of the residents. This paper uses the staggered treatment timing of the titling program to examine whether receipt of a title deed increases residential property values and whether titled households leverage their title deeds as collateral to access formal credit. Using modern difference-in-differences estimators, I find that receipt of a title deed increases residential property values by 6% on average. I also find that receiving a title deed results in a small but statistically significant 0.5 percentage point increase in the likelihood that property owners use their title as collateral to access formal bank loans.