TY  - JOUR
AU  - Guiso,Luigi
AU  - Sapienza,Paola
AU  - Zingales,Luigi
TI  - The Role of Social Capital in Financial Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7563
PY  - 2000
Y2  - February 2000
UR  - http://www.nber.org/papers/w7563
L1  - http://www.nber.org/papers/w7563.pdf
N1  - Author contact info:
Luigi Guiso
European University Institute
Economics Department
Villa San Paolo
50133 Florence
ITALY
Fax: 39-055-4685-902
E-Mail: luigi.guiso@eui.eu

Paola Sapienza
Kellogg School of Management
Northwestern University
2001 Sheridan Road, Evanston, IL 60208
Tel: 847/491-7436
Fax: 847/491-5719
E-Mail: paola-sapienza@northwestern.edu

Luigi Zingales
Booth School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-3196
Fax: 773/834-2081
E-Mail: luigi.zingales@ChicagoBooth.edu
AB  - To identify the effect of social capital on financial development, we exploit the well-known differences in social capital and trust  (Banfield (1958), Putnam (1993)) across different parts of Italy, using microeconomic data on households and firms. In areas of the country with high levels of social trust, households invest less in cash and more in stock, use more checks, have higher access to institutional credit, and make less use of informal credit. In these areas, firms also have more access to credit and are more likely to have multiple shareholders. The effect of trust is stronger where legal enforcement is weaker and among less-educated people.  The behavior of movers is mainly affected by the level of trust of the environment where they live, but a significant fraction of the effect is also due to the level of trust  prevailing in the province where they grew up.
ER  -