page_title: Qianzhuang
section_title: Modern influence
hierarchical_section_title: Qianzhuang / Modern influence
caption_attribution_description: English: A photograph taken of the Hang Seng Bank while it was still a "Yinhao" (銀號) in British Hong Kong.
context_page_description: Qianzhuang, alternatively known as qiansi, qianpu, yinhao, duihuan qianzhuang, qiandian, qianzhuo, duidian, qianju, yinju, or yinpu in Mandarin Chinese, and translated as money shops, native banks, private Chinese banks, or old-style banks in English, were a large number of small native Chinese banks that operated independently of the nationwide network of Shanxi banks, these banks first sprung up during the Ming dynasty but greatly expanded during the Qing dynasty. Unlike the Shanxi banks, the qianzhuang tended to have much more risky business practices.
  These institutions first appeared in the Yangzi Delta region, in Shanghai, Ningbo, and Shaoxing. The first qianzhuang can be traced to at least the mid-eighteenth century. In 1776, several of these banks in Shanghai organised themselves into a guild under the name of qianye gongsuo. In contrast to piaohao, most qianzhuang were local and functioned as commercial banks by conducting local money exchange, issuing cash notes, exchanging bills and notes, and discounting for the local business community. Qianzhuang maintained close relationships with Chinese merchants, and grew with the expansion of China's foreign trade.
context_section_description: In January of 2018 VoxChina issued an article comparing the data on qianzhuang and diandan in 137 counties in northern China, mostly in the Shandong province, in 1912 with the modern development of informal financial entities in the same region, particularly small loan companies (xiao’e daikuan gongsi), rotating savings and credit associations (ROSCAs or hehui), pawnshops, and (illegal) underground banks (dixia qianzhuang) over the past couple of decades before the study and how these informal financial institutions both emerged and rapidly expanded. The analysis found a positive correlation between the density of historical financial institutions and the density of modern informal small loan companies. 
  In counties where there was a large native financial sector denominated by qianzhuang and diandan before the year 1911, the density of small loan companies tended to be higher in 2018. In terms of magnitude, VoxChina found a 1% increase in the number of historical financial institutions (per 10,000 people) in the late Qing dynasty era increases 0.096% of the number (and 0.158% of total assets) of small loan companies (per 10,000 people) in the same areas in 2013. These results are potent to controlling for a range of confounding factors including economic growth, the structure of the local industry, state-owned banking companies, and the geography of these small financial institutions, among others. The researchers of VoxChina suspected that these correlations might be related to the tenants of Confucianism which harnessed a culture where these informal financial institutions only provide services to respected and credible people. VoxChina compared the density of informal and small financial institutions with the density of Confucian temples and found a positive correlation strengthening their hypothesis that their presence is related to Confucian culture in absence of strong modern legal protections which may cause modern banking and financial institutions to rely more on traditional methods of conduct. 
  Similar effects of historical financial institutions and religious cultures have also been found in Islamic countries and Italy. As their work coincides with both Pauline Grosjean, who in her 2011 paper The Institutional Legacy of the Ottoman Empire: Islamic Rule and Financial Development in South Eastern Europe published in the Journal of Comparative Economics found that the historical Islamic rule that prohibited interest-lending resulted in a less developed financial and banking market today, and Luigi Pascali, who in his 2016 paper Banks and Development: Jewish Communities in the Italian Renaissance and Current Economic Performance in the Review of Economics and Statistics found that the charity-lending institutions in 15th century Italy still had an effect on the performance of the modern Italian banking sector.
caption: The Hang Seng Bank (恒生銀號) was founded in British Hong Kong in 1933 as a yinhao and later evolved into a commercial bank.
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