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Guiso, L., Sapienza, P., Zingales, L. (2004). The role of social capital in financial development. American Economic Review 94(3): 526–556.

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.

Authors

Guiso, Luigi

Prof. Guiso joined the Institute in January 2007 from Università di Roma Tor Vergata. He has been visiting professor at the University of Chicago, Graduate School of Business. He is a Fellow of the Centre for Economic Policy Research, London and Director of the CEPR Finance Programme. He...

Sapienza, Paola

Paola Sapienza is a professor of finance at the Kellogg School of Management. She also serves as a faculty fellow for the Zell Center for Risk Research, a research affiliate of the Center for Economic Policy Research and a faculty research fellow in the National Bureau of Economic Research's...

Zingales, Luigi

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