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“Credit Use” and Cost of Discredit: The Supreme People’ Court and Zhima Credit Cooperating to Punish “Lao Lai”

In: Inclusive Finance in China

Author

Listed:
  • Yan Li

    (Renmin University of China)

  • Lin Wang

    (Beijing University of Posts and Telecommunications)

  • Jianxiao Su

    (Renmin University of China)

  • Yuqin Tang

    (Renmin University of China)

  • Puning Wang

    (Renmin University of China)

Abstract

Severe punishment constitutes an important condition for the reputation mechanism to play a part in governance. We believe that “credit use” can increase the cost of discredit and drive the reputation mechanism to play an effective role, and further analyze and test this point of view with the case of the Supreme People’s Court and Zhima Credit cooperating to punish “Lao Lai” (i.e. dishonest person). The case study discovers the follows: First, the cost of discredit exerts a significant influence on the effect of the reputation mechanism. Second, the increase of the scenarios where credit is used can effectively raise the cost of discredit. Third, market-oriented operation of credit investigation will evidently improve “credit use” of society and strengthen the role and effect of the reputation mechanism. Fourth, the reputation mechanism functions as a great support to the legal mechanism.

Suggested Citation

  • Yan Li & Lin Wang & Jianxiao Su & Yuqin Tang & Puning Wang, 2021. "“Credit Use” and Cost of Discredit: The Supreme People’ Court and Zhima Credit Cooperating to Punish “Lao Lai”," Springer Books, in: Yan Li & Lin Wang (ed.), Inclusive Finance in China, chapter 0, pages 321-355, Springer.
    • Handle: RePEc:spr:sprchp:978-981-16-1788-1_9
    DOI: 10.1007/978-981-16-1788-1_9
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