We study the impact of an epidemic disease on modern financial development by exploiting geographic variations in the precolonial survival conditions of the TseTse fly, which transmits an epidemic disease that is harmful to humans and fatal to livestock in Africa. Using newly georeferenced data, we discover that firms and households in regions historically more exposed to the epidemic disease have less access to external financing today. Exploring the channels, we find that people in historically infested regions are less likely to trust others and financial institutions,to share credit information and to learn and adopt new financial technologies.
|Journal||Journal of Financial Economics|
|Early online date||11 Jun 2021|
|Publication status||E-pub ahead of print - 11 Jun 2021|
- external financing
- financial development
- technology adoption