Contracting without contracting institutions: The trusted assistant loan in 19th century China

This paper documents the emergence of a large bank loan market in absence contracting institutions: trusted assistant 19th century China. These loans were legally unenforceable, one-shot to poor scholars that funded costs assuming lucrative administrative appointments offering ample opportunities for corruption. The loan’s distinguishing feature was unenforceable stipulation borrower incorporate an agent creditor into his cadre. We model enforcement these through expertise leverage and test model’s predictions using data from officials’ diaries book.