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

Using a sample of Chinese households, we study how a type of social capital, private social networks, affects access to credit and its implications for consumption. We find a strong and likely causal link between private social networks, use of informal credit, and household consumption. Informal credit via private social networks facilitates household consumption especially for households that experienced a recent health shock, that face financial constraints, and that do not have access to formal finance, and the effects are more pronounced in poor regions and rural areas.

Author - Robert Cull, Li Gan, Nan Gao, Lixin Colin Xu
Journal - Journal of Banking and Finance

Source - https://www.sciencedirect.com/science/article/abs/pii/S0378426622002175