APPLICATIONS OF SOCIAL CAPITAL THEORY

Abstract

Experiments and studies were conducted to investigate the role of social capital. Social capital (relationship to others) is a productive asset which is a substitute for and complement to other productive assets. The productivity of social capital leads to the expectation that firms and individuals invest in relationships. Data were collected to answer the following questions: Does the identity (relationship) of trading partners affect selling and buying prices; the acceptance of catastrophic risk; the choice of share or cash leases in agriculture; loan approval; and the banks investment to retain customers? The evidence is in the affirmative.Behavioral economics, Institutional economics, Social capital, Institutional and Behavioral Economics,