How Does Lower Transaction Cost Impact Risk-sharing Activities? Evidence from the Mobile Transaction in China during the Pandemic
Abstract
Evidences have been found in literature that the use of new technology could help people in developing countries form and enhance their risk-sharing networks and become more resilient to shocks. Despite the quick adaption of mobile payment in China during recent years and the existence of a large group of migrant workers, a systematical analysis on whether the mobile payment innovation in China imposes an impact on the risk-sharing within the informal network among rural households is currently absent. This research aims to utilize the Covid-19 pandemic as an exogenous shock to investigate the rural household risk-sharing behaviors and the impact of the transaction cost reduction due to mobile payment in rural China. Our work could provide further insights into how mobile payment helps households and develop the economy in a more confounding way.
