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Formal and informal debt in China: Evidence from the 2014 hukou reform

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  • Xu, Lei
  • Tani, Massimiliano
  • Zhu, Yu
  • Wen, Xin

Abstract

We investigate the impact of China's 2014 hukou reform – a major change allowing migrants living in small and medium-sized cities of less than 5 million people to apply for urban residence - on formal and informal borrowing at a time of rapid economic transformation. We find that the hukou policy change has predominantly increased natives' access to finance, especially through informal sources, and for investments in housing. We also find that the policy affects households differently according to education level, with more educated households borrowing more to capitalise on rising asset prices driven by the ‘additional’ urban population created by the policy.

Suggested Citation

  • Xu, Lei & Tani, Massimiliano & Zhu, Yu & Wen, Xin, 2025. "Formal and informal debt in China: Evidence from the 2014 hukou reform," Emerging Markets Review, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:ememar:v:69:y:2025:i:c:s1566014125001165
    DOI: 10.1016/j.ememar.2025.101367
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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