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The co-evolution of social capital and financial development

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  • Marc Sangnier

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper documents the co-evolution of social capital, measured as generalized trust, and financial development over the twentieth century. I use cross generations inherited trust of Americans with foreign ancestors to track trust in their home country in 1913 and 1990. The paper documents a positive cross-section relationship between trust and financial development in 1913. Then, I show that increasing trust is also associated with increasing financial development at the country level over the twentieth century. In other words, countries that experienced larger improvements in trust also experienced a stronger financial development. These results are robust to the introduction of real GDP per capita and trade openness as alternative determinants of financial development.

Suggested Citation

  • Marc Sangnier, 2011. "The co-evolution of social capital and financial development," PSE Working Papers halshs-00585008, HAL.
    • Handle: RePEc:hal:psewpa:halshs-00585008
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00585008
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    References listed on IDEAS

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    1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
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    11. Alessandra Fogli & Raquel Fernandez, 2009. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 146-177, January.
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    Cited by:

    1. Sangnier, Marc, 2013. "Does trust favor macroeconomic stability?," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 653-668.

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    More about this item

    Keywords

    Développement financier; capital social; confiance; Financial development; social capital; trust;
    All these keywords.

    JEL classification:

    • N2 - Economic History - - Financial Markets and Institutions
    • Z1 - Other Special Topics - - Cultural Economics

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