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Article

Social Capital and Loan Cost: The Role of Interpersonal Trust

1
Department of Economics and Finance, University of Rome Tor Vergata, 00133 Roma, Italy
2
School of Finance and Management, SOAS University of London, London WC1H 0XG, UK
*
Author to whom correspondence should be addressed.
Academic Editor: Olaf Weber
Sustainability 2022, 14(3), 1238; https://doi.org/10.3390/su14031238
Received: 3 December 2021 / Revised: 12 January 2022 / Accepted: 18 January 2022 / Published: 22 January 2022
(This article belongs to the Special Issue Sustainable and Responsible Investing)
We argue that social dilemmas structured as investment trust games are a dominant feature in social and economic life due to asymmetric information, incomplete contracts and non-overlapping competencies that are typical characteristics of business relationships. We therefore consider that borrowers living in geographical areas with higher interpersonal trust are more likely to overcome the coordination failures typical of this kind of social dilemmas, thereby creating higher economic value and reducing the risk of their economic activity. Our empirical findings support this hypothesis, showing that lenders charge significantly lower loan costs on borrowers living in areas characterized by higher interpersonal trust. View Full-Text
Keywords: social dilemmas; trust games; interpersonal trust; all-in spread social dilemmas; trust games; interpersonal trust; all-in spread
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MDPI and ACS Style

Becchetti, L.; Manfredonia, S.; Pisani, F. Social Capital and Loan Cost: The Role of Interpersonal Trust. Sustainability 2022, 14, 1238. https://doi.org/10.3390/su14031238

AMA Style

Becchetti L, Manfredonia S, Pisani F. Social Capital and Loan Cost: The Role of Interpersonal Trust. Sustainability. 2022; 14(3):1238. https://doi.org/10.3390/su14031238

Chicago/Turabian Style

Becchetti, Leonardo, Stefano Manfredonia, and Fabio Pisani. 2022. "Social Capital and Loan Cost: The Role of Interpersonal Trust" Sustainability 14, no. 3: 1238. https://doi.org/10.3390/su14031238

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