Does Finance Make Us Less Social?

42 Pages Posted: 22 Aug 2018

See all articles by Henrik Cronqvist

Henrik Cronqvist

University of Miami - Department of Finance

Mitch Warachka

University of San Diego

Frank Yu

China Europe International Business School

Date Written: July 2018

Abstract

Formal financial contracts and informal risk-sharing agreements within social networks both enable households to manage risk. Using an exogenous reduction in the cost of financial contracting, we find that the increased use of financial contracts to manage household risk is associated with a decline in religious adherence and smaller church congregations. These results indicate that a cost-benefit analysis leads households to replace their participation in social networks with lower-cost financial contracts. Our study contributes toward understanding the implications of emerging technologies known collectively as FinTech that lower the cost of financial contracting.

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 2018). 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)

University of San Diego ( email )

5998 Alcala Park
University of San Diego
San Diego, CA 92110-2492
United States

Fang Yu

China Europe International Business School ( email )

669 Hongfeng Road
Pudong
Shanghai, 201206
China

Register to save articles to
your library

Register

Paper statistics

Downloads
213
rank
134,882
Abstract Views
3,031
PlumX Metrics