Does Finance Make Us Less Social?

48 Pages Posted: 22 Aug 2018 Last revised: 23 Jul 2019

See all articles by Henrik Cronqvist

Henrik Cronqvist

University of Miami - Department of Finance

Mitch Warachka

Chapman University

Frank Yu

China Europe International Business School

Date Written: July 22, 2019

Abstract

Informal risk sharing within social networks and financial contracts both enable households to manage risk. Does the use of financial contracts affect household participation in social networks? Using an exogenous increase in crop insurance usage due to the Federal Crop Insurance Reform Act of 1994, we find an associated reduction in the number of religious adherents and the size of church congregations. In addition, consistent with an increase in moral hazard, the use of crop insurance also reduced crop diversification and crop yields.

Keywords: Household Risk Management, Social Networks, FinTech

JEL Classification: G02, G28

Suggested Citation

Cronqvist, Henrik and Warachka, Mitch and Yu, Fang, Does Finance Make Us Less Social? (July 22, 2019). Available at SSRN: https://ssrn.com/abstract=3229344 or http://dx.doi.org/10.2139/ssrn.3229344

Henrik Cronqvist

University of Miami - Department of Finance ( email )

5250 University Drive
314-E Jenkins Building
Coral Gables, FL 33146
United States
(305) 284-9482 (Phone)

HOME PAGE: http://sites.google.com/site/henrikcronqvist/

Mitch Warachka (Contact Author)

Chapman University ( email )

Orange, CA 92866
United States

Fang Yu

China Europe International Business School ( email )

669 Hongfeng Road
Pudong
Shanghai, 201206
China

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