Research Achievement by Associate Researcher Li Jianwen Published in Top International Development Economics Journal Journal of Development Economics
Recently, the co-authored paper Missing repayments on haze days: Evidence from China by Associate Researcher Li Jianwen from the School of Economics, Shandong University, was officially published in Journal of Development Economics. His co-authors are Assistant Professor Li Keyang from the School of International Trade and Economics, University of International Business and Economics, and Researcher Yuan Ren from the School of Economics, Zhejiang University. Li Jianwen is the co-first author. Journal of Development Economics is a top international journal in the field of development economics, focusing on various fields of economic development.
This paper examines the impact of air pollution on a universal financial decision that is cognitively less demanding. Based on 281,314 repayment records from a leading P2P lending platform in China, the study finds that borrowers are more likely to miss their repayments when the scheduled repayment days witness heavier air pollution. A deterioration of air quality from "excellent" to "severely polluted" is associated with an instantaneous and transitory increase in delinquency rate by 143.3 basis points (11.3%). Instrumental variable estimates based on pollution transport via wind or thermal inversion show similar results. This paper finds that air pollution may cause borrowers to forget their repayment obligations, and once air quality improves, borrowers usually make up the payments in a timely manner, so this phenomenon does not reflect borrowers' financial distress. However, pollution-induced delinquencies reduce borrowers' credit ratings and success rates of future loan applications, with an effect as large as that due to delinquencies unlikely to be driven by pollution, implying a misallocation of credit. This paper uses provident fund repayment data and finds similar delinquency responses.
This paper expands the relevant research on the "non-health" effects of air pollution. Existing studies mainly focus on the negative impact of air pollution on high-cognitive-demand tasks (such as college entrance examinations, competitions, investment decisions, etc.), while this paper further reveals the extensive impact of air pollution on daily low-cognitive-demand tasks (such as repaying debts on time), revealing the profound impact of air pollution on daily decision-making. Based on the unique scenario of debt repayment with high frequency and fixed decision time points, this paper systematically investigates the repayment timing of air pollution-induced delinquencies, individual learning effects, and the heterogeneous mechanisms of short-term and long-term pollution exposure, enriching the understanding of the impact of air pollution on financial decision-making. In addition, this paper finds that debt default induced by air pollution may trigger credit rationing and lead to credit resource misallocation, further revealing the economic costs brought by air pollution.
Li Jianwen is an Associate Researcher at the School of Economics, Shandong University. His research fields are fintech, artificial intelligence and their applications in economics and finance. He has published more than 10 academic papers in domestic and foreign journals such as Journal of Development Economics, Journal of Banking & Finance, The Journal of World Economy, and Finance & Trade Economics.
Paper link:
https://doi.org/10.1016/j.jdeveco.2025.103491
