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Marc Sangnier
''The co-evolution of social capital and financial development''
( 2011, Vol. 31 No.2 )
This paper documents the co-evolution of social capital, measured as generalized trust, and financial development over the twentieth century. I use cross generations inherited trust of Americans with foreign ancestors to track trust in their home country in 1913 and 1990. The paper documents a positive cross-section relationship between trust and financial development in 1913. Then, I show that increasing trust is also associated with increasing financial development at the country level over the twentieth century. In other words, countries that experienced larger improvements in trust also experienced a stronger financial development. These results are robust to the introduction of real GDP per capita and trade openness as alternative determinants of financial development.
Keywords: Financial development, social capital, trust.
JEL: N2 - Economic History: Financial Markets and Institutions: General, International, or Comparative
Z1 - Cultural Economics; Economic Sociology; Economic Anthropology: General
Manuscript Received : May 17 2010 Manuscript Accepted : Apr 08 2011

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