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Contracting without contracting institutions: The trusted assistant loan in 19th century China
- Source :
- Journal of Financial Economics. 140:987-1007
- Publication Year :
- 2021
- Publisher :
- Elsevier BV, 2021.
-
Abstract
- This paper documents the emergence of a large bank loan market in the absence of contracting institutions: the trusted assistant loan market in 19th century China. These loans were legally unenforceable, one-shot loans to poor scholars that funded the costs of assuming lucrative administrative appointments offering ample opportunities for corruption. The trusted assistant loan’s distinguishing feature was a legally unenforceable stipulation that the borrower incorporate an agent of the creditor into his administrative cadre. We model the enforcement of these loans through expertise leverage and test the model’s predictions using data from officials’ diaries and a bank loan book. JEL classifications:G21, O16, D86
- Subjects :
- Economics and Econometrics
Unenforceable
Creditor
Corruption
Strategy and Management
media_common.quotation_subject
GeneralLiterature_MISCELLANEOUS
Stipulation
Leverage (negotiation)
Accounting
0502 economics and business
ComputingMilieux_COMPUTERSANDEDUCATION
China
Enforcement
media_common
040101 forestry
Finance
050208 finance
business.industry
InformationSystems_INFORMATIONSYSTEMSAPPLICATIONS
05 social sciences
04 agricultural and veterinary sciences
ComputingMilieux_MANAGEMENTOFCOMPUTINGANDINFORMATIONSYSTEMS
ComputingMethodologies_PATTERNRECOGNITION
Loan
0401 agriculture, forestry, and fisheries
Business
Subjects
Details
- ISSN :
- 0304405X
- Volume :
- 140
- Database :
- OpenAIRE
- Journal :
- Journal of Financial Economics
- Accession number :
- edsair.doi.dedup.....605be82327affd75c7b4fdf811f7c4df