Research

This paper examines the relationship between kin-based institutions and the state in the modern Chinese economy, exploring how clans may manipulate or influence local governments. Using data from China’s primary land market and a nationwide genealogy dataset, we employ spatial matching to estimate clans’ causal impacts on land parcel prices, which are a crucial source of fiscal revenue for local government. We find that firms linked to local clans obtained 1.7%-3.4% lower prices than those without clanship connections. We show that clan firms get lower prices through collusion with bidders, a process facilitated by local government officials. This patron-client relationship can lead to a decline in economic growth at the county level, while China’s anti-corruption campaign suppressed clans’ negative economic impact.

This chapter studies how political connections shaped the rise and fall of the Shanxi banks (piaohao), a type of Chinese financial institution owned and operated mainly by natives of Shanxi province that dominated inter-regional remittances in the nineteenth century. We find that Shanxi banks opened more branches in provinces where the provincial governors came from Shanxi.  However, Shanxi banks declined after political connections were broken due to the collapse of the Qing dynasty in 1911, and the decline was faster in provinces that had been governed by more Shanxi officials than in the other regions.