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The Impact of Cultural Dimensions on the Share of Deposits and Investments in Investment Funds

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  • Elena Ralinska
  • Svetoslav Jonev

Abstract

Despite the accumulated evidence that national culture influences the financial decisions of households across the European Union, there are relatively limited quantitative studies about its impact on the distribution of assets between secure deposits and riskier investments. This study examines whether Hofstede's six cultural dimensions contribute to explaining this phenomenon by analysing their effect on the financial behaviour of European households, measured by the share of investments in deposits and investment funds. Regression analysis statistically validates the claim that individualism is negatively associated with the relative share of deposits, while uncertainty avoidance has a positive effect on this share, indicating a stronger orientation towards security. Conversely, motivation towards achievement (masculinity) and individualism are positively associated with participation in investment funds, suggesting a higher propensity to take risks in individualistic and ‘masculine’ cultures. Power distance, long-term orientation and indulgence do not show any lasting effects. The results confirm the importance of cultural archetypes as factors determining the distribution of household assets and highlight the need to integrate them into the development of behavioural finance-based policies.

Suggested Citation

  • Elena Ralinska & Svetoslav Jonev, 2025. "The Impact of Cultural Dimensions on the Share of Deposits and Investments in Investment Funds," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 337-354.
    • Handle: RePEc:bas:econth:y:2025:i:3:p:337-354
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    References listed on IDEAS

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    2. Andy C.W. Chui & Sheridan Titman & K.C. John Wei, 2010. "Individualism and Momentum around the World," Journal of Finance, American Finance Association, vol. 65(1), pages 361-392, February.
    3. Kurt A. Desender & Christian E. Castro & Sergio A. Escamilla De León, 2011. "Earnings Management and Cultural Values," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(3), pages 639-670, July.
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    More about this item

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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