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Informal credit enhancement in bond markets: Evidence from Chinese clan culture

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  • Xu, Quanyi
  • Yang, Yuting
  • Wu, Lian
  • Jiang, Jie

Abstract

From an informal institutional perspective, this paper examines the impact of clan culture on corporate bond credit spreads in China. Using a sample of bond-issuing listed companies from 2014 to 2023, the study finds that clan culture significantly reduces corporate credit spreads. This effect operates through a dual mechanism: ethical reputation constraints curbing aggressive risk-taking and clan-based implicit guarantees providing support during distress. Furthermore, we demonstrate that this informal credit enhancement yields specific financial outcomes: larger issue sizes and lower collateral requirements. Heterogeneity analyses reveal that this protective effect is more pronounced for firms facing financial distress, severe information asymmetry, weaker asset structures, or managed by local executives. The findings suggest clan culture acts as effective informal credit enhancement, substituting for formal institutions in emerging markets.

Suggested Citation

  • Xu, Quanyi & Yang, Yuting & Wu, Lian & Jiang, Jie, 2026. "Informal credit enhancement in bond markets: Evidence from Chinese clan culture," Finance Research Letters, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finlet:v:102:y:2026:i:c:s1544612326006513
    DOI: 10.1016/j.frl.2026.110123
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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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