Trust in China: A Cross-Regional Analysis

22 Pages Posted: 19 Aug 2004

See all articles by Weiying Zhang

Weiying Zhang

Peking University - Department of Applied Economics

Rongzhe Ke

Peking University

Date Written: June 2003

Abstract

Using the cross-regional data, this paper shows that trust has a strong effect on uneven development of economy in China. As is discovered in many studies, it is found that trust affects the growth of economy, size distribution of enterprise, and FDI inflow and so on. We also find that cross-regional differences of trust in China are reflections of the regional diversities of education, marketization of economies, urbanization, population density and transportation facilities. Although not statistically significant, "too many officials" may damage social trust. The paper demonstrates that trust cannot simply be taken as a cultural heritage. The paper also argues that sustainability of further economic development of China much depends on how fast China can build trust-facilitating institution, and that the most fundamental institution for trust is the property right.

Keywords: Trust, Economic performance, Information Repeated game, Transaction

Suggested Citation

Zhang, Weiying and Ke, Rongzhe, Trust in China: A Cross-Regional Analysis (June 2003). Available at SSRN: https://ssrn.com/abstract=577781 or http://dx.doi.org/10.2139/ssrn.577781

Weiying Zhang (Contact Author)

Peking University - Department of Applied Economics ( email )

Beijing, 100871
China

Rongzhe Ke

Peking University

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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