Institutional Foundations of Impersonal ExchangeTheory and Policy of Contractual Registries

Institutional Foundations of Impersonal ExchangeTheory and Policy of Contractual Registries

Benito Arrunada

Print publication date: 2013

ISBN: 9780226028323

Publisher: University of Chicago Press

Abstract

Governments and development agencies spend considerable resources building property and company registries to protect property rights. When these efforts succeed, owners feel secure enough to invest in their property and banks are able use it as collateral for credit. Similarly, firms prosper when entrepreneurs can transform their firms into legal entities and thus contract more safely. Unfortunately, developing registries is harder than it may seem to observers, especially in developed countries, where registries are often taken for granted. As a result, policies in this area usually disappoint. This book aims to prevent such failures by deepening our understanding of both the value of registries and the organizational requirements for constructing them. Presenting a theory of how registries strengthen property rights and reduce transaction costs, the author analyzes the major tradeoffs and proposes principles for successfully building registries in countries at different stages of development. He focuses on land and company registries, explaining the difficulties they face, including current challenges such as the subprime mortgage crisis in the United States and the dubious efforts made in developing countries toward universal land titling. Broadening the account, the author extends his analytical framework to other registries, including intellectual property and organized exchanges of financial derivatives. With its nuanced presentation of the theoretical and practical implications, the book expands our understanding of how public registries facilitate economic growth.