Journal of Financial Economics Vol. 143 No. 1 2022

Epidemic disease and financial development

Jiafu An^1,2; Wenxuan Hou^3,4; Chen-Ta Lin⁵

¹ University of Portsmouth · ² University of Aberdeen · ³ Shanghai Lixin University of Accounting and Finance · ⁴ University of Edinburgh · ⁵ University of Hong Kong

Abstract

We study the impact of an epidemic disease on modern financial development by exploiting geographic variations in the precolonial survival conditions of the TseTse fly, which transmits an epidemic disease that is harmful to humans and fatal to livestock in Africa. Using newly georeferenced data, we discover that firms and households in regions historically more exposed to the epidemic disease have less access to external financing today. Exploring the channels, we find that people in historically infested regions are less likely to trust others and financial institutions, to share credit information and to learn and adopt new financial technologies.

DOI

10.1016/j.jfineco.2021.06.003

Volume

143

Issue

1

Pages

332-358

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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