IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v15y2024i4d10.1007_s13132-023-01723-w.html
   My bibliography  Save this article

Social Capital, Financial Lending, and Household Income—An Empirical Study from China

Author

Listed:
  • Xiangdie Chen

    (Yanbian University)

  • Qiqing Zhou

    (College of International Economics, Shaanxi Institute of International Trade & Commerce)

Abstract

This study focuses on China as the research subject, obtaining relevant research data from the China Family Panel Studies Database (CFPS). Panel data is formed, and a double fixed-effects model is employed to explore the relationship between social capital, financial lending, and their interaction term with household income. The results of the study indicate that social capital can promote an increase in household income, with only relational social capital having a significant effect on it. Financial lending also has a positive impact on household income, but only formal financial lending plays a constructive role. Additionally, a significant interaction effect between social capital and financial lending is observed, with the interaction term contributing to higher household income. Further tests through heterogeneity analysis reveal variations in the interaction effects across populations. Specifically, the central region of China, individuals aged 60 or older, and those with middle and high school education show significant interaction effects.

Suggested Citation

  • Xiangdie Chen & Qiqing Zhou, 2024. "Social Capital, Financial Lending, and Household Income—An Empirical Study from China," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 16096-16121, December.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:4:d:10.1007_s13132-023-01723-w
    DOI: 10.1007/s13132-023-01723-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-023-01723-w
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-023-01723-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Raj Chetty & Matthew O. Jackson & Theresa Kuchler & Johannes Stroebel & Nathaniel Hendren & Robert B. Fluegge & Sara Gong & Federico Gonzalez & Armelle Grondin & Matthew Jacob & Drew Johnston & Martin, 2022. "Social capital I: measurement and associations with economic mobility," Nature, Nature, vol. 608(7921), pages 108-121, August.
    2. Ishise, Hirokazu & Sawada, Yasuyuki, 2009. "Aggregate returns to social capital: Estimates based on the augmented augmented-Solow model," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 376-393, September.
    3. Hans Binswanger & Shahidur Khandker, 1995. "The impact of formal finance on the rural economy of India," Journal of Development Studies, Taylor & Francis Journals, vol. 32(2), pages 234-262.
    4. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
    5. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    6. Woolcock, Michael & Narayan, Deepa, 2000. "Social Capital: Implications for Development Theory, Research, and Policy," The World Bank Research Observer, World Bank, vol. 15(2), pages 225-249, August.
    7. Meng-Ying Wang & Li-Chen Chou, 2022. "Political cycle and the financial lending scale," Applied Economics Letters, Taylor & Francis Journals, vol. 29(6), pages 534-539, March.
    8. Minglei Zhu & Xiaowei Song & Wenxin Chen, 2022. "Impact of Social Capital on Land Arrangement Behavior of Migrant Workers in China," Journal of Economic Analysis, Anser Press, vol. 1(1), pages 35-48, September.
    9. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2010. "Formal versus Informal Finance: Evidence from China," The Review of Financial Studies, Society for Financial Studies, vol. 23(8), pages 3048-3097, August.
    10. Tóth, Zsófia & Nemkova, Ekaterina & Hizsák, Gábor & Naudé, Peter, 2022. "Social capital creation on professional sharing economy platforms: The problems of rating dependency and the non-transferability of social capital," Journal of Business Research, Elsevier, vol. 144(C), pages 450-460.
    11. Levine, Ross, 1999. "Law, Finance, and Economic Growth," Journal of Financial Intermediation, Elsevier, vol. 8(1-2), pages 8-35, January.
    12. Minglei Zhu & Xiaowei Song & Wenxin Chen, 2022. "The Impact of Social Capital on Land Arrangement Behavior of Migrant Workers in China," Journal of Economic Analysis, Anser Press, vol. 1(1), pages 35-49, September.
    13. Philip Arestis & Asena Caner, 2004. "Financial Liberalization and Poverty: Channels of Influence," Economics Working Paper Archive wp_411, Levy Economics Institute.
    14. Paul Gertler & David I. Levine & Enrico Moretti, 2006. "Is Social Capital the Capital of the Poor? The Role of Family and Community in Helping Insure Living Standards against Health Shocks," CESifo Economic Studies, CESifo Group, vol. 52(3), pages 455-499, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shijun Chai & Yang Chen & Bihong Huang & Dezhu Ye, 2019. "Social networks and informal financial inclusion in China," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 529-563, June.
    2. Chai, Shijun & Chen, Yang & Huang, Bihong & Ye, Dezhu, 2018. "Social Networks and Informal Financial Inclusion in the People’s Republic of China," ADBI Working Papers 802, Asian Development Bank Institute.
    3. Hong Sun & Valentina Hartarska & Lezhu Zhang & Denis Nadolnyak, 2018. "The Influence of Social Capital on Farm Household’s Borrowing Behavior in Rural China," Sustainability, MDPI, vol. 10(12), pages 1-20, November.
    4. Singh, Nirvikar, 2018. "Financial Inclusion: Concepts, Issues and Policies for India," MPRA Paper 91047, University Library of Munich, Germany.
    5. Chiswick, Barry R. & Wang, Zhiling, 2019. "Social Contacts, Dutch Language Proficiency and Immigrant Economic Performance in the Netherlands," GLO Discussion Paper Series 419, Global Labor Organization (GLO).
    6. Adil EL Fakir & Richard Fairchild & Youssef Lamrani Alaoui & Dora Chan & Mohamed Tkiouat & Zaid Amer, 2024. "Kinship, gender and social links impact on micro group lending defaults," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2527-2542, April.
    7. Bengt Söderlund & Patrik Gustavsson Tingvall, 2017. "Capital Freedom, Financial Development and Provincial Economic Growth in China," The World Economy, Wiley Blackwell, vol. 40(4), pages 764-787, April.
    8. Jie Yu & Xiao Han & Baozhen Chen & Jinzheng Ren, 2020. "Estimating the Impact of Poverty Alleviation Microcredit on the Income of Poor Households Using the Propensity Score Matching Method: Evidence from China," Agriculture, MDPI, vol. 10(7), pages 1-19, July.
    9. Mishra, Aswini Kumar & Bhardwaj, Vedant, 2022. "Financial access and household’s borrowing: Policy perspectives of an emerging economy," Journal of Policy Modeling, Elsevier, vol. 44(5), pages 981-999.
    10. Hartarska, Valentina & Nadolnyak, Denis, 2008. "An Impact Analysis of Microfinance in Bosnia and Herzegovina," World Development, Elsevier, vol. 36(12), pages 2605-2619, December.
    11. Mark Schreiner & Jacob Yaron, 2001. "Development Finance Institutions : Measuring Their Subsidy," World Bank Publications - Books, The World Bank Group, number 13983, August.
    12. Khandker, Shahidur R. & Faruqee, Rashid R., 2003. "The impact of farm credit in Pakistan," Agricultural Economics, Blackwell, vol. 28(3), pages 197-213, May.
    13. C. Kirabo Jackson & Henry S. Schneider, 2011. "Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 244-267, July.
    14. Angelucci Manuela & De Giorgi Giacomo & Rangel Marcos & Rasul Imran, 2009. "Village Economies and the Structure of Extended Family Networks," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-46, October.
    15. Cheng, Xiaoyu & Wang, Jianying & Chen, Kevin Z., 2022. "Does villager social capital hinder poverty targeting? Evidence from poverty-stricken county of Western China," China Economic Review, Elsevier, vol. 71(C).
    16. Erhardt, Eva, 2017. "Microfinance beyond self-employment: Evidence for firms in Bulgaria," MPRA Paper 79294, University Library of Munich, Germany.
    17. Thorsten Beck, 2009. "The Econometrics of Finance and Growth," Palgrave Macmillan Books, in: Terence C. Mills & Kerry Patterson (ed.), Palgrave Handbook of Econometrics, chapter 25, pages 1180-1209, Palgrave Macmillan.
    18. Adam Gemar, 2024. "Parental Status Connection and Social Network Variety in Adulthood," Societies, MDPI, vol. 14(2), pages 1-13, February.
    19. Rafael Gomez & Eric Santor, 2001. "Membership has its privileges: the effect of social capital and neighbourhood characteristics on the earnings of microfinance borrowers," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 943-966, November.
    20. Posso, Alberto, 2023. "Terrorism, banking, and informal savings: Evidence from Nigeria," Journal of Banking & Finance, Elsevier, vol. 150(C).

    More about this item

    Keywords

    Social capital; Financial lending; Household income; Double fixed effects model; Coordination effects;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jknowl:v:15:y:2024:i:4:d:10.1007_s13132-023-01723-w. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.