Credit and social unrest: Evidence from 1930s China

Fabio Braggion, A. Manconi, H. Zhu

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Do credit contractions trigger social unrest? To answer this question, we turn to a natural experiment from 1930s China, where the 1933 U.S. Silver Purchase program acts as a shock to bank lending. We assemble a hand-collected dataset of loan contracts between banks and firms, labor unrest episodes, and underground Communist Party penetration. The Silver Purchase shock results in a severe credit contraction, and firms borrowing from banks with a larger exposure to it experience increased labor unrest and Communist Party penetration among their workers. These findings contribute to understanding the socio-political consequences of credit shocks.
Original languageEnglish
Pages (from-to)295-315
JournalJournal of Financial Economics
Volume138
Issue number2
Early online dateMay 2020
DOIs
Publication statusPublished - Nov 2020

Keywords

  • credit shocks
  • social unrest

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