The role of social capital in financial development

Luigi Guiso*, Paola Sapienza, Luigi Zingales

*Corresponding author for this work

Research output: Contribution to journalReview article

921 Scopus citations

Abstract

To identify the effect of social capital on financial development, we exploit social capital differences within Italy. In high-social-capital areas, households are more likely to use checks, invest less in cash and more in stock, have higher access to institutional credit, and make less use of informal credit. The effect of social capital is stronger where legal enforcement is weaker and among less educated people. These results are not driven by omitted environmental variables, since we show that the behavior of movers is still affected by the level of social capital of the province where they were born.

Original languageEnglish (US)
Pages (from-to)526-556
Number of pages31
JournalAmerican Economic Review
Volume94
Issue number3
DOIs
StatePublished - Jun 2004

ASJC Scopus subject areas

  • Economics and Econometrics

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