Social Trust and Entrepreneurship: Insights from China's Social Credit System

Hongxing Fang, Linghong Chen, Jiacai Xiong and Yushu Zhu

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: This study examines the impact of China's Social Credit System (CSCS) pilot policy on entrepreneurship on a panel of 2,256 city-year observations across 282 cities from 2012 to 2019. We find that the social credit system promotes entrepreneurship, with the effect being more pronounced in regions characterized by weaker legal environments, lower levels of marketization, and poorer economic conditions. The underlying mechanisms facilitating this impact encompass improved access to bank credit, increased talent attraction, and diminished regional corruption. Our study enriches the existing literature on the relationship between social credit and entrepreneurship and provides policy insights for promoting regional entrepreneurial endeavors.

Keywords: Social credit; Trust; Entrepreneurship; Bank credit; Talent attraction; Regional corruption (search for similar items in EconPapers)
JEL-codes: G28 M13 R11 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s154461232400148x

DOI: 10.1016/j.frl.2024.105118

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