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National culture and financial literacy: international evidence

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  • Muzaffarjon Ahunov
  • Leo Van Hove

Abstract

We examine to what extent (aspects of) national culture can explain cross-country variations in financial literacy. Our results, for a sample of 92 countries, show that Hofstede’s dimensions of power distance and individualism explain, respectively, over 40 and 60 per cent – which is substantially more than national cognitive scores and standard economic variables. In particular, we find that financial literacy is lower in countries where power distance is high, and that the opposite is true for individualism. Uncertainty avoidance would seem be negatively related with financial literacy, but the evidence is not so strong. For masculinity, indulgence, and long-term orientation we find no significant impact. Overall, our results highlight the need for additional (interdisciplinary) theories that can improve our understanding of the determinants of financial literacy and better guide policies in this area.

Suggested Citation

  • Muzaffarjon Ahunov & Leo Van Hove, 2020. "National culture and financial literacy: international evidence," Applied Economics, Taylor & Francis Journals, vol. 52(21), pages 2261-2279, May.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:21:p:2261-2279
    DOI: 10.1080/00036846.2019.1688241
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    File URL: http://hdl.handle.net/10.1080/00036846.2019.1688241
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    Cited by:

    1. Nicole Jonker & Anneke Kosse, 2020. "The interplay of financial education, financial literacy, financial inclusion and financial, stability: Any lessons for the current Big Tech era?," DNB Working Papers 692, Netherlands Central Bank, Research Department.
    2. Muzaffarjon Ahunov & Leo Van Hove, 2020. "National culture and (dis)trust in banks: Cross‐country evidence," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 49(3), September.
    3. Kenneth De Beckker & Kristof De Witte & Geert Van Campenhout, 2020. "The role of national culture in financial literacy: Cross‐country evidence," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(3), pages 912-930, September.

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