Social Capital, Finance, and Consumption: Evidence from a Representative Sample of Chinese Households
37 Pages Posted: 11 Nov 2016 Last revised: 27 Apr 2018
Date Written: October 24, 2016
Using a new, nationally representative sample of Chinese households, this paper studies how social capital affects access to credit and its implications for consumption levels. The paper focuses on two specific forms of social capital: private social networks and membership in the Communist Party. Although party affiliation is linked to higher consumption in rural areas, those benefits are direct and thus do not work through credit markets. The main finding is a strong link between private social networks, use of informal credit, and household consumption. Instrumental variable regressions indicate that the link is causal. However, the study finds no evidence that social capital has facilitated formal credit market development in China, as it has in countries with higher levels of private sector development.
Keywords: Educational Sciences, Urban Governance and Management, Municipal Management and Reform, Urban Housing, Urban Housing and Land Settlements, Access to Finance, Transport Services, Marketing, Private Sector Economics, Private Sector Development Law
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