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Abstract
The effects of land sales restrictions on credit use, land investment and cultivation decisions are investigated using data from
two villages in south India. Sales restrictions are found to have little effect on credit supply and demand or demand for land
improvements. Some household characteristics are found to affect investment demand on plots subject to sales restrictions
in one village, suggesting that the 'transactions effect' of such restrictions may be inhibiting allocative efficiency. However,
we also find that household characteristics influence investment on titled plots, and that the magnitude of impact of such
characteristics is greater on titled plots. These results imply that sales restrictions are not a major source of inefficiency in
the villages studied, and suggest that the nature of village credit and land markets and enforcement of sales restrictions are
critical determinants of the impacts of such restrictions. ©1999 Elsevier Science B.V. All rights reserved.