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Culture and financial literacy: Evidence from a within-country language border

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  • Brown, Martin
  • Henchoz, Caroline
  • Spycher, Thomas

Abstract

We study the effect of culture on financial literacy by comparing secondary-school students along the German–French language border within Switzerland. We find that students in the French-speaking region have a lower level of financial literacy than students in the German-speaking region. The difference in financial literacy across the language groups is stronger for native students and monolingual students than for immigrant students and bilingual students. This supports the hypothesis that embedded cultural differences rather than unobserved heterogeneity in schooling are driving the effect. A mediation analysis suggests that the cultural divide in financial literacy is related to systematic differences in financial socialisation across the language groups. Students in the German speaking region are more likely to receive pocket money at an early age, and are more likely to have independent access to a bank account than students in the French speaking region.

Suggested Citation

  • Brown, Martin & Henchoz, Caroline & Spycher, Thomas, 2018. "Culture and financial literacy: Evidence from a within-country language border," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 62-85.
  • Handle: RePEc:eee:jeborg:v:150:y:2018:i:c:p:62-85
    DOI: 10.1016/j.jebo.2018.03.011
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    More about this item

    Keywords

    Culture; Financial literacy; Financial socialisation;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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