Finance Research Seminar

Wirtschaftsuniversität Wien, Departments 3 D3.0.22511:00 - 12:30

Art Vortrag/Diskussion
Vortragende/rAlberto Manconi (Università Commerciale Luigi Bocconi)
Veranstalter Wirtschaftsuniversität Wien Vienna Graduate School of Finance
Kontakt office@vgsf.ac.at

Credit, Labor, and Poli­tical Unrest: Evidence from 1930s China

Do economic shocks inflame poli­tical unrest? To answer this ques­tion, we study a natural expe­ri­ment from 1930s China, where the 1933 U.S. Silver Purchase program acts as a shock to bank lending. This setting elimi­nates poten­tial confoun­ding effects of policy, narrows the set of rele­vant social actors (factory workers and the Commu­nist Party), and provides an exoge­nous shock to credit, limiting the scope for reverse causa­lity. We assemble a novel, hand-­collected dataset of loan contracts between banks and indi­vi­dual firms, labor unrest episodes, and under­ground Commu­nist Party pene­tra­tion. We show that the Silver Purchase shock results in a severe credit contrac­tion, and that firms borro­wing from banks with a larger expo­sure to the shock expe­ri­ence increased labor unrest and Commu­nist Party pene­tra­tion among their workers. These findings cont­ri­bute to under­stan­ding the soci­o-­po­li­tical conse­quences of credit, and more in general economic, shocks.

Credit, Labor, and Poli­tical Unrest: Evidence from 1930s China

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