Social capital and repayment behaviour: evidence from China household finance survey

We empirically examine the influence of social capital on household repayment behaviour, using data from the China Household Finance Survey (CHFS). Our analysis reveals that social capital significantly reduce bank loan defaults. Moreover, our results suggest that social capital affects repayment behaviour primarily for business loans, and this effect is significant only among households with more active and tightly connected social networks. Finally, our results suggest that both social support and social pressure could explain this effect.