Disguised corruption: Evidence from consumer credit in China

Sumit Agarwal, Wenlan Qian, Amit Seru and Jian Zhang

Journal of Financial Economics, 2020, vol. 137, issue 2, 430-450

Abstract: Using a comprehensive sample of credit card data from a leading Chinese bank, we show that government bureaucrats receive 16% higher credit lines than non-bureaucrats with similar income and demographics, but their accounts experience a significantly higher likelihood of delinquency and debt forgiveness. Regions associated with greater credit provision to bureaucrats open more branches and receive more deposits from the local government. After staggered corruption crackdowns of provincial-level political officials, the new credit cards originated to bureaucrats in exposed regions do not enjoy a credit line premium, and bureaucrats’ delinquency and reinstatement rates are similar to those of non-bureaucrats.

Keywords: Corruption; Credit cards; Credit; Debt; Household finance; Government; Bureaucrats; Banking; Political connections; China (search for similar items in EconPapers)
JEL-codes: D73 G21 P26 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:137:y:2020:i:2:p:430-450

DOI: 10.1016/j.jfineco.2020.03.002

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