Cull R , Gan L. ,Gao N , Xu LC；Oxford Bulletin of Economics and Statistics；2019.08

Using a new and representative data set of Chinese household fifinance, we document house

hold usage and costs of fifinance, along with their correlates. As in many developing coun

tries, informal credit is a crucial element of household fifinance, and interest-free informal

loans based on reciprocal personal relationships are highly prevalent in our sample. Not

surprisingly, wealth tends to be associated with greater usage of both formal and informal

fifinance. Political connections, extensive social networks and certain household demo

graphic characteristics (such as size) are all positively associated with formal or informal

credit usage (or both). Overall, our fifindings show signs that a dual credit market is emerg

ing in China, with the poor, politically unconnected, and those with larger family sizes still

heavily reliant on informal fifinance, most of which are interest-free, while younger, wealth

ier households with better political connections and fifinancial knowledge are increasingly

using formal fifinance.