This study investigates the role of contextual cues in memory-based decision-making within high-stakes trading environments. Using trade records from a large Chinese brokerage firm and a novel dataset on COVID-19 quarantines, we find that quarantine periods trigger the recall of previously traded stocks, increasing the likelihood of subsequent orders for those stocks. The observed patterns align more closely with similarity-based recall than with alternative channels. Welfare analysis reveals that these memory-induced trades lead to an annualized loss of approximately 70 percentage points for the representative investor's portfolio. We also find evidence at the market level: when the geographical distribution of quarantine risks is recalled, the probability of recalling the cross-sectional stock return-volume distribution from the same day increases by 1.6 percentage points. This study provides causal evidence from a real-world setting for memory-based theories, particularly similarity-based recall, and highlights a novel channel through which COVID-19 policies affect financial markets.

This paper identiffes culture as an important factor affecting corporate cash holdings by using China and its national culture, Confucianism, as the setting. We find that firms located in regions with stronger Confucian culture hold persistently higher levels of cash. We employ an instrumental variable to draw causal inference. The culture effect is stronger for more ffnancially-constrained and riskier ffrms, suggesting precautionary motives as the underlying mechanism. We ffnd that the culture effect remains intact after controlling for corporate governance heterogeneity, which rules out the agency motives. Lastly, ffrms’ operating performance indicates that high cash holdings is an efffcient outcome.

This paper examines the relationship between the large-scale construction of broadband infrastructure and digital financial inclusion in rural China. To make causal inferences, we exploit a quasi-natural experiment and use a difference-in-differences identification strategy with panel dataset of Chinese counties from 2014 to 2018. The results show that broadband infrastructure significantly contributes to digital inclusion. Further, we distinguish between two dimensions of digital inclusion, namely, the coverage and the usage. We find that while broadband infrastructure significantly promotes the coverage dimension, its effect on the usage dimension is limited. Besides, the effects of broadband infrastructure on digital inclusion, and in particular on the usage dimension, are larger in areas with higher levels of human capital, higher levels of social capital, and higher penetrations of bank branches. Taking into account those moderators is important to fully harness the potential of broadband infrastructure on financial inclusion.