Jing Cai is an Assistant Professor in the Department of Agricultural and Resource Economics at the University of Maryland. She was an assistant professor of Economics at the University of Michigan before joining Maryland. She received her PhD from the University of California at Berkeley in 2012. She is a Research Fellow at the National Bureau of Economic Research (NBER) and an affiliate of the Bureau for Research and Economic Analysis of Development (BREAD). Her research areas are development economics, Chinese economy, and household finance. Her current research examines the diffusion and impacts of financial innovations in developing countries, growth of micro-enterprises and SMEs, and impacts of tax incentives on firm behavior.
Featured Affiliate Interview
I was surprised to see that actually very few farmers choose to borrow from the formal bank. When I talked with those farmers, I found that they frequently ask for information about the loan product from their friends. That's how I got interested in looking at the role of social networks in influencing the adoption of new financial products.
What got you interested in development economics, particularly in the role of social networks on the adoption of new financial products?
My interest in development economics started in graduate school. I did a survey with my Master’s degree advisor about rural finance. That experience got me interested in studying the role of financial development in influencing rural household behavior and welfare. During the first two years of my Ph.D. studies, I worked closely with the main rural bank in China on the contract design of microfinance products. I was surprised to see that actually very few farmers choose to borrow from the formal bank. When I talked with those farmers, I found that they frequently ask for information about the loan product from their friends. That's how I got interested in looking at the role of social networks in influencing the adoption of new financial products.
What is one current research project that you're particularly excited about?
I'm working on a project with Adam Szeidl studying the impact of business networks on firm performance. This is based on a large scale field experiment with micro, small, and medium enterprises in China. In the experiment, we organized small business groups and regular business meetings for randomly selected managers of young firms. We found very exciting results—the meetings increase firm sales by 7.7 percentage points, and also increase profits, employment, productivity, and the number of business partners. We also found evidence on several mechanisms: peer effects, information diffusion, and improved partnering and trust. Based on these results we expect that similar business meetings should be useful in contexts in which trust and information frictions are important barriers. Because organizing the meetings is cheap, business associations may be an effective policy tool to foster private sector development in such settings.
What is your "dream evaluation"? (It doesn't have to be feasible!)
I have two ideas that I hope can be implemented in the near future. First, I would be interested in studying the causal effect of suppliers on firm growth. Specifically, I want to learn how access to a supplier, and the quality of the supplier, affects business performance. One "dream intervention" could be one to connect some producers to "good" suppliers, others to "bad" suppliers, and a control group to no suppliers. Comparing between these groups could inform us about the magnitude of search costs in finding new suppliers and the impact of supplier quality on firm performance. Second, we know that the turnover rate of manufacturing firms in developing countries is very high. I want to test whether empowering workers can affect worker turnover and productivity. One interesting intervention to empower workers would be to give workers the power to elect their own supervisor.
What is your most memorable story from the field?
The most memorable story for me from the business network project mentioned above is that during the very first business meeting, I saw the manager of a car company advertise their products to other group members, and they went to the dealership together right after the meeting. I was really excited to see my intervention take effect so fast!