Abstract
The importance of protecting individual property rights has been widely accepted. By contrast, the unequivocalness of individual land property rights, especially its role as collateral, has been widely debated. This study discusses an alternative system, land pawning, which enables people to borrow without land property rights. Based on studies on Japanese early modern period, this study argues that land pawning and credit transactions were active even without a land property system. Japanese early modern history suggests that establishing a land property right is not a prerequisite for the development of financial activities. The Japanese early modern land and taxation system also suggests a close link between land-based taxation and a land-based credit system. Institutionalist studies ignore the role of taxation in the land system and collateral-backed finance. There is a theoretical discrepancy between the availability of land for use as collateral and inducing industrial investment. This gap within the various institutionalist arguments needs to be closed.
