Credit and social unrest: Evidence from 1930s China

Fabio Braggion, Alberto Manconi () and Haikun Zhu

Journal of Financial Economics, 2020, vol. 138, issue 2, 295-315

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 data set 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.

Keywords: Credit shocks; Social unrest (search for similar items in EconPapers)
JEL-codes: G01 G21 N15 N25 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:138:y:2020:i:2:p:295-315

DOI: 10.1016/j.jfineco.2020.05.001

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