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Historical social capital and contemporary private investment choices

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  • Feng, Chen
  • Bai, Caiquan
  • Kang, Yankun

Abstract

This paper investigates the impact of historical commercial social capital on contemporary private investment choices. We use unique data on shanghui, which represented the most important institutionalization of commercial social capital in China's financial industry in the late Qing Dynasty, to find that the establishment of shanghui is associated with a significant increase in residents' private risky asset investment today. The impact originates mainly from (i) an increase in local available investment finance, (ii) individuals' higher financial knowledge and literacy, and (iii) individuals' higher trust level and risk-taking abilities in the financial market. From a historical perspective, this study partially explains the current private investment choices and household financial investment imbalance in China.

Suggested Citation

  • Feng, Chen & Bai, Caiquan & Kang, Yankun, 2023. "Historical social capital and contemporary private investment choices," Journal of Corporate Finance, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:corfin:v:79:y:2023:i:c:s0929119923000147
    DOI: 10.1016/j.jcorpfin.2023.102365
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    More about this item

    Keywords

    Shanghui; Private investment choice; Social capital;
    All these keywords.

    JEL classification:

    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • N85 - Economic History - - Micro-Business History - - - Asia including Middle East
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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