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Social capital, finance, and consumption: evidence from a representative sample of Chinese households

Author

Listed:
  • Cull,Robert J.
  • Gan,Li
  • Gao,Nan
  • Xu,L. Colin
  • Cull,Robert J.
  • Gan,Li
  • Gao,Nan
  • Xu,L. Colin

Abstract

Using a new, nationally representative sample of Chinese households, this paper studies how social capital affects access to credit and its implications for consumption levels. The paper focuses on two specific forms of social capital: private social networks and membership in the Communist Party. Although party affiliation is linked to higher consumption in rural areas, those benefits are direct and thus do not work through credit markets. The main finding is a strong link between private social networks, use of informal credit, and household consumption. Instrumental variable regressions indicate that the link is causal. However, the study finds no evidence that social capital has facilitated formal credit market development in China, as it has in countries with higher levels of private sector development.

Suggested Citation

  • Cull,Robert J. & Gan,Li & Gao,Nan & Xu,L. Colin & Cull,Robert J. & Gan,Li & Gao,Nan & Xu,L. Colin, 2016. "Social capital, finance, and consumption: evidence from a representative sample of Chinese households," Policy Research Working Paper Series 7873, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7873
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    Cited by:

    1. Pawan Ashok Kamble & Atul Mehta & Neelam Rani, 2025. "Measuring Multidimensional Financial Resilience: An Ex-ante Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 176(2), pages 533-567, January.
    2. Zhou, Xianbo & Wu, Yingming & Sun, Yucheng, 2025. "Consumption peer effects among migrants in China," International Review of Economics & Finance, Elsevier, vol. 103(C).
    3. Zhao, Fan & Li, Ruirui & Wu, Ziyin & Ru, Xue, 2025. "Can the integration of digital and real economies stimulate residents' consumption?," International Review of Financial Analysis, Elsevier, vol. 103(C).
    4. Li, Zhiwen & Wu, Meijie & Qin, Yi & Li, Ting & Zheng, Xiaoqiang, 2025. "Social capital and rural household energy poverty: Evidence from the China Family Panel Studies," Energy, Elsevier, vol. 335(C).
    5. Liu, Taixing & Yin, Zhichao, 2024. "The clan and informal financing in China: An analysis of the trickle-down effect," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 646-666.
    6. Balana, Bedru & Oyeyemi, Motunrayo, 2021. "Credit Constraints and Adoption of Agricultural Technologies in Developing Countries? Evidence from Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315347, International Association of Agricultural Economists.
    7. Yuting Xu & Yitian Lin & Hong Yang & Guoliang Xu & Chao Cheng, 2025. "The Influence of Rural Land Transfer on Rural Households’ Income: A Case Study in Anhui Province, China," Land, MDPI, vol. 14(2), pages 1-21, January.
    8. Lei, Jie & Bai, Yiyi & Kong, Dongmin, 2024. "Bank competition and household informal credit," International Review of Financial Analysis, Elsevier, vol. 94(C).
    9. Yixiao Nai & Di Hu & Fei Jin & Beichen Liu, 2025. "The Financial Superiority of Cooperation in Household Entrepreneurship: Insights From the Chinese Household Financial Survey," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(4), pages 2603-2628, June.

    More about this item

    Keywords

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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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