Andreas Milidonis
University of Cyprus
National Culture and Bank Risk-Taking
- 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.