Premium
Money Following Trust: Evidence from China’s High‐Value Payment System
Author(s) -
Qian Xianhang,
Zhang Guangli,
Cao Tingqiu
Publication year - 2019
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12184
Subject(s) - endogeneity , china , payment , business , matching (statistics) , cash flow , value (mathematics) , payment system , free cash flow , perspective (graphical) , actuarial science , public economics , economics , accounting , finance , econometrics , law , political science , statistics , mathematics , machine learning , artificial intelligence , computer science
This study enriches the economic consequence of trust from the perspective of cash flow. It analyzes the impact of trust on interprovincial cash flow using matching data pertaining to Chinese provincial trust and the high‐value payment system in 2006–2010. It further investigates trust’s effect in different legal protection scenarios to explore the interactive role of formal and informal institutions. The results indicate that trust can significantly promote interprovincial cash flow and it persists after addressing endogeneity concerns and across different methods. However, this effect is only significant or much larger in provinces with less legal protection, indicating the alternative roles played by trust and formal institutions.