One solutiont o the repaymenpt roblemi n creditm arketsi s to have the borrowerp
ut up a physicala ssett hat the lenderc an seize if the borrowerd efaults.
Such assets are usually hard to come by in rural credit markets, partly because
the borrowersa re too poor to have assets that could be collateralizeda, nd
partly becausep oorly developedp ropertyr ights make appropriatingco llateral
in the event of default difficult in rural areas of many developing countries.
Improvingt he codificationo f land rightsi s often suggested,t hereforea, s a way
to extend the domain of collateral and improve the working of financial markets.
This idea is discussed in greater detail below