We investigate the role of informal institutions—specifically, clan culture—in
facilitating agricultural land markets in the absence of robust formal property rights.
Exploiting the staggered rollout of China's agricultural land certification program as
a quasi-experiment, we analyze rural household land rental behavior. We document
two main findings. First, villages with stronger clan networks exhibit significantly
higher rates of land out-leasing, highlighting the protective role of informal cultural
norms on land tenure security. Second, the policy-induced increase in land leasing—
driven by the formalization of property rights—is substantially weaker in villages
with strong pre-existing clan cultures. Our findings suggest a strong substitution
effect between formal legal institutions and informal cultural norms, providing direct
empirical evidence on the protective power of social capital in developing
economies.
