Does Farming Culture Shape Household Financial Decisions?

68 Pages Posted: 4 Jan 2023 Last revised: 10 Jan 2024

See all articles by Sipeng Zeng

Sipeng Zeng

Shanghai Jiao Tong University

Frank Yu

China Europe International Business School

Date Written: January 3, 2023


Historical rice cultivation practices have shaped cultural norms that significantly affect households' risk-taking behavior today. Using national survey data from over 90,000 Chinese households and a quasi-experimental design, we find that these culturally induced behaviors, in turn, contribute to significant economic differences at a large scale. Our tests show that households in regions with a higher historical rate of rice cultivation are more likely to invest in the financial market and buy lottery tickets, but less likely to buy insurance. The underlying mechanism is that collectivist rice agricultural practices increase trust, social capital, and social connections, and even allow for societal members to borrow without interest. Additional tests show that our findings are not driven by regional economic growth, government-provided social safety nets, Confucian values, or ethnic diversity. These deep-rooted, ancient practices have important policy implications for leaders in collectivist cultures trying to rectify behavioral biases in household financial decisions.

Keywords: Household finance; Financial decision; Farming culture; Financial Investment; Trust

JEL Classification: D14; G11; G40; G50; Z13

Suggested Citation

Zeng, Sipeng and Yu, Frank, Does Farming Culture Shape Household Financial Decisions? (January 3, 2023). Journal of Corporate Finance, Vol. 84, No. 102533, 2024, Available at SSRN: or

Sipeng Zeng (Contact Author)

Shanghai Jiao Tong University ( email )

1954 Huashan Road
Shanghai, Shanghai 200030

Frank Yu

China Europe International Business School ( email )

669 Hongfeng Road
Shanghai, 201206

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