University of Cyprus
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National Culture and Bank Risk-Taking
Mourouzidou-Damtsa Stella, Milidonis Andreas and Stathopoulos Konstantinos.
Journal of Financial Stability,
Publication year: 2017
We investigate the relation between national cultural values and bank risk.
We find evidence of an economically significant association between cultural values and domestic bank risk.
We report a positive (negative) association between the cultural values of individualism and hierarchy (trust) and domestic bank risk-taking.
Consistent with our predictions,
this relation weakened during the recent financial crisis, and
does not hold for global banks, regardless of the period under investigation.
Findings are robust to endogeneity tests that mitigate concerns regarding reverse causality and confounding effects affecting our conclusions.