Paper short abstract:

Knowing the right people at the right place can make land transactions easier in Bangladesh. However there is no empirical evidence connecting social networks to transaction costs in the land market. In this paper we explore this question using nationally representative rural household survey data.

Paper long abstract:

Social networks play an important role in the ease of land transactions in Bangladesh. Plagued with a history of inconsistent land records and complex institutional arrangements, the land market is subject to information asymmetry problems, which gives rise to a thriving informal system. Land transactions are known to be costly and complicated for a regular citizen if she does not know the right people at the right places. Although this is common knowledge, this relationship between social networks and land transaction costs has not been explored in the empirical literature, mostly due to lack of data. Our paper focuses on land registration service and explores whether having a strong or better social network makes the transaction easier. Using household survey data from a nationally representative survey of rural households in Bangladesh, we test whether social network is related to the experience of availing the service of land registration. To the best of our knowledge, this is the first empirical research that shows this link between social network and land transaction costs. Our results show that households with better social networks spend less time waiting for land deeds after land registration but spend more compared to their counterparts. This is an important contribution to the literature on land markets in Bangladesh and points to the need for further research on how and why land transaction costs vary.