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Secure property right as a determinant of SME’s access to formal credit in Ghana: Dynamics between Micro Finance Institutions and Universal Banks

Domeher, D, Abdulai, RT and Yeboah, E (2016) Secure property right as a determinant of SME’s access to formal credit in Ghana: Dynamics between Micro Finance Institutions and Universal Banks. Journal of Property Research. ISSN 1466-4453

Secure property rights-Revised final - JPR Jan 2016.pdf - Accepted Version

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Does registered land title help to improve tenure security and enhance one’s chances of securing a loan from formal financial institutions? This question continues to sharply divide opinions among academics, policy-makers and international development partners. The long running debate on the subject of ‘Property in the Commons’, which serves as the ideological origin of what has become known as ‘Washington Consensus’ in contemporary times claims that there is positive correlation between the possession of registered land title and access to credit. However, this has often received considerable rebuttals. Even if the ‘Washington Consensus’ is accepted, the argument is still laced with some fundamental difficulty because it inherently assumes and treats financial institutions as a homogenous class of business. Yet financial institutions exhibit greater diversity in their operations and decision-making process. This paper attempts to contribute towards developing improved understanding between the ‘secure land title and access to credit relationship’ by disaggregating financial institutions into Micro-finance and Universal Banks (UBs) and examining what role secure land title play in granting credit from the perspectives of these two categories of financial institutions. To achieve this, field level investigations were conducted amongst officials of both Micro-finance Institutions (MFIs) and UBs in Ghana using structured questionnaires. A total of 200 questionnaires – 100 each to MFI and Universal Banks were administered of which a response rate of 51 and 57 was, respectively, achieved. The data were analysed using various non-parametric statistics. The study amongst other things established that UBs and MFIs differ in their opinions on how important secure titles are in the lending process and the nature of the influence they can exert on the final lending decision. It was established that both categories of lenders do regard secure titles as important but whether or not it will influence their decision to accept a given landed property as collateral varies across lender types.

Item Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Property Research on 29th March 2016, available online: http://dx.doi.org/10.1080/09599916.2016.1160948
Uncontrolled Keywords: 1504 Commercial Services, 1502 Banking, Finance And Investment, 1402 Applied Economics
Subjects: H Social Sciences > HG Finance
Divisions: Civil Engineering & Built Environment
Publisher: Taylor & Francis
Date Deposited: 19 May 2016 13:27
Last Modified: 04 Sep 2021 12:55
URI: https://researchonline.ljmu.ac.uk/id/eprint/3631
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