We examine whether and how the cultural background of corporate chairpersons, specifically clan culture, influences firm-to-firm lending decisions. Using hand-collected data on Chinese entrusted loans, a major segment of the country’s shadow banking sector, we find that firms led by chairpersons from prefectures with stronger clan culture are more likely to originate entrusted loans and charge lower spreads. We identify distinct mechanisms governing affiliated versus nonaffiliated transactions. In affiliated lending, our evidence suggests an in-group favoritism channel: culturally embedded chairpersons support affiliated parties despite higher ex-post default risk. Conversely, non-affiliated lending operates via an informational channel, where the positive impact of clan culture is more pronounced when geographic barriers are low, and manifests in larger size dispersion. Overall, our findings highlight the dual role of cultural norms in shadow banking, demonstrating that clan culture facilitates credit allocation while generating sharply different efficiency implications across relationship-based and arm’s-length markets.