Using a novel, nationally representative data set on fraud victimization, this paper examines the impact of credit constraints on fraud victimization and potential underlying mechanisms in Chinese urban areas. After controlling for other household characteristics and regional fixed effects, households facing credit constraints are associated with 2.3 percentage points higher probability of becoming fraud victims, and have 20.4 percent higher subsequent economic losses from fraud when they are approached. The results are robust when dealing with the endogeneity of facing credit constraints and when addressing potential sample selection bias. Further analyses show that the personal discount rate (impatience) and the need for social network expansion are critical pathways via which credit constraints affect fraud victimization. The findings suggest that improving financial development is an effective way to reduce fraud victimization.
Details
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Author
Gao,Nan, Ma,Yuanyuan, Xu,L. Colin
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Document Date
2020/10/27
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Document Type
Policy Research Working Paper
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Report Number
WPS9460
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2020/10/27
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Disclosure Status
Disclosed
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Doc Name
Credit Constraints and Fraud Victimization : Evidence from a Representative Chinese Household Survey
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Keywords
credit constraint; development research group; econometric analysis of cross section; fraud scheme; urban household; access to formal credit; high risk of exposure; fraud victim; discount rate; years of schooling; impact of credit; household head; victim of fraud; housing privatization reform; credit card fraud; annual interest rate; state owned enterprise; state-owned enterprise; loans from bank; social network; implementation of reform; misallocation of capital; real estate investment; access to bank; supply of capital; million people; obtaining bank loan; government and law; formal financial service; fuel efficient car; risk of fraud; journal of finance; affordable housing program; increase in income; property of state; representative data set; exposure to risk; number of victims; average treatment effect; household survey data; collateral for loan; permanent income hypothesis; household and individual; household saving rate; emergency financial assistance; Planning and Financial; endogenous growth model; health care products; level of consumption; housing tenure choice; fixed effect; credit institution; illiquid asset; information acquisition; housing reform; local bank
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Citation
Gao,Nan Ma,Yuanyuan Xu,L. Colin
Credit Constraints and Fraud Victimization : Evidence from a Representative Chinese Household Survey (English). Policy Research working paper,no. WPS 9460 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/443311603820960549/Credit-Constraints-and-Fraud-Victimization-Evidence-from-a-Representative-Chinese-Household-Survey