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The Allocation of Talent and Financial Development, 1897 to 1936

Author

Listed:
  • Chen Lin

    (Faculty of Business and Economics, The University of Hong Kong, Hong Kong)

  • Chicheng Ma

    (Faculty of Business and Economics, The University of Hong Kong, Hong Kong)

  • Yuchen Sun

    (China School of Banking and Finance, University of International Business and Economics, Beijing 100029, China)

  • Yuchen Xu

    (Business School, University of New South Wales, Kensington, New South Wales 2052, Australia)

Abstract

We examine how the supply of talent affected financial development based on an experiment that abruptly changed the allocation of talent in historical China. Under the meritocratic civil examination system, government service was the main employment for the Chinese intellectuals. The abolition of this system in 1905 reduced the status and wealth attached to government service, which led the intellectuals to turn to modern banking as a high-status sector of employment. We find that regions where there were more candidates for the civil examination produced more financial professionals after 1905, which translated to a greater development of modern banking.

Suggested Citation

  • Chen Lin & Chicheng Ma & Yuchen Sun & Yuchen Xu, 2025. "The Allocation of Talent and Financial Development, 1897 to 1936," Management Science, INFORMS, vol. 71(6), pages 4688-4706, June.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:6:p:4688-4706
    DOI: 10.1287/mnsc.2023.00456
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