Guan Yu worship has been a significant cultural force in China for centuries, shaping norms that foster generalized trust and acting as an informal institution in economic activities. Our findings reveal that regions with a higher historical density of Guan temples tend to have deeper financial development. To address potential endogeneity, we use the distance of each prefecture from Guan Yu’s hometown as an instrumental variable. The instrumented results confirm the robustness of our findings. Further analysis indicates that the underlying mechanism driving these outcomes is the enhancement of interpersonal and interfirm trust.
Ding et al. (Sun,) studied this question.