Mourouzidou-Damtsa Stella, Milidonis Andreas and Stathopoulos Konstantinos.
Journal of Financial Stability, 40, 132-143.
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.