Effects of national culture on bank risk-taking behavior
By Badar Nadeem Ashraf, Changjun Zheng, Sidra Arshad. 2016
177 citations recorded by the source corpus.
Theory suggests that national culture influences bank risk-taking behavior directly by conditioning the decision-making of human participants. This study uses an international sample of banks from 75 countries and examines the direct effects of national culture on bank risk-taking behavior. We measure national culture with four dimensions – uncertainty avoidance, individualism vs. collectivism, masculinity vs. femininity and power distance – from Hofstede's framework of national culture. We find strong evidence that bank risk-taking is significantly higher in countries which have high individualism, low uncertainty avoidance, and low power distance cultural values. We confirm main results using alternate cultural dimensions from House et al. (2004. Culture, Leadership, and Organizations. Sage)’s framework of national culture, using alternative bank risk-taking proxies, and using instrumental variables analysis for endogeneity issues. This paper adds to our understanding by finding that cultural values lead to bank risk-taking decisions that may deviate in systematic and geographically predictable ways.
Subfields: Accounting, Demography
View Paper: https://www.semanticscholar.org/paper/8b4e4c2ad3f7204b4438297ec1bf0f366fc82c37
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Citations in the corpus
- Economic policy uncertainty and banks’ loan pricing (2019, background): “4 National culture (Ashraf et al. 2016; Ashraf & Arshad 2017) and political institutions (Ashraf 2017; Ashraf et al.”
- Political Institutions and Bank Risk-Taking Behavior (2015, unknown): “…Nicolo 2005; Martinez-Miera & Repullo 2010), macroeconomic indicators such as GDP growth, inflation, unemployment rates etc. (Ali & Daly 2010; Castro 2013; Chaibi & Ftiti 2015), legal institutions (Houston et al. 2010; Cole & Turk 2013; Fang et al. 2014) and national culture (Ashraf et al. 2016c).”