The Heterogeneity of Merchant Guild Culture and Corporate Financialization

【Authors】

WANG Xiaoyu, ZHANG Yanyu & ZOU Rukang

【WorkUnit】

WANG Xiaoyu （Shanghai Lixin University of Accounting and Finance, 201802）；ZHANG Yanyu （Jiangnan University, 214122）；ZOU Rukang （China Construction Bank, 100161）

【Abstract】

In the course of long-term commercial practices, China has cultivated a unique merchant guild culture, along with associated norms and business philosophies. Shaped by religious beliefs, business customs, and social values, this culture has developed over centuries and continues to shape today’s business and commercial practices. This study investigates the impact of differing merchant guild philosophies—broadly categorized as adventurous or conservative—on corporate financialization activities in contemporary Chinese firms. By analyzing historical capital allocation patterns among the ten most renowned merchant guilds from the Ming and Qing dynasties, this study explores how variations in historical conditions, regional customs, geographical influences, and policy environments have contributed to distinct business philosophies and investment strategies, which continue to influence corporate financial decisions.
Our empirical findings demonstrate that firms led by chairpersons from guilds with adventurous traditions exhibit significantly higher corporate financialization levels than those from conservative guilds. Heterogeneity analyses further reveal that this effect is particularly pronounced in less marketized regions, under greater short-term performance pressures, and with younger leadership. The underlying mechanism analysis indicates that guild culture affects corporate financialization primarily through managerial risk preferences, with notable benefits for innovation-driven firms, suggesting that a moderate degree of financialization—rooted in guild traditions—can complement rather than stifle innovation.
This study contributes to the literature in three primary ways. First, it extends research on corporate financialization by highlighting the role of informal institutions, showing how risk preference traditions promote balanced financial investment alongside innovation. Second, it enriches interdisciplinary studies on culture, economics, and finance. Lastly, it advances merchant guild research beyond historical narratives by empirically linking guild culture to modern corporate behavior—a relatively underexplored area in existing research.
From a practical perspective, this study offers valuable policy implications. Understanding merchant guild culture provides insights into the origins of regional business practices, offering policymakers a cultural framework to assess economic development strategies. Additionally, fostering a balanced approach to corporate financialization—aligning financial asset allocation with real economic needs—can help stabilize financial markets, reduce systemic risks, and promote sustainable economic growth in China.

JEL: G30, Z10

【KeyWords】

Merchant Guild Culture, Adventurous, Corporate Financialization