What made finance develop in the West but not in China? We argue that long before modern finance, China chose to rely on the kinship-based Confucian clan, whereas the West chose the corporate entity combined with impersonal instruments, to deal with the challenges of interpersonal risk sharing...

We examine how the supply of talent affected financial development, based on a historical experiment that abruptly changed the allocation of talent in early 20th- century China. A millennium-long meritocratic institution, the imperial civil examination system had firmly linked Chinese...