THE CONTRIBUTION OF SOCIAL TRUST TO THE EVOLUTION OF DIGITAL FINANCE
Keywords:
social trust, digital finance, institutional framework, formal and informal institutions, regional heterogeneity, panel data.Abstract
Social trust is an important institutional factor shaping the development of digital finance. Using provincial panel data from 27 Chinese provinces over the period 2012–2021, this study empirically investigates the role and underlying mechanisms of social trust in digital finance development. By incorporating social trust into the analytical framework, the study extends existing research that predominantly focuses on technological and economic determinants, emphasizing the influence of social and psychological factors. The results indicate a complex relationship between formal and informal institutions, characterized by both substitution and complementarity effects. Moreover, significant regional heterogeneity is observed in the impact of social trust on digital finance. Specifically, social trust significantly promotes the depth and level of digitalization of digital finance, while its effect on financial breadth is not statistically significant. These findings contribute to the literature on digital finance and institutional economics and provide important policy implications for improving institutional arrangements and fostering the sustainable development of the digital finance sector.
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