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Incompatible European Partners? Cultural Predispositions and Household Financial Behavior

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  • Haliassos, Michael
  • Jansson, Thomas
  • Karabulut, Yigitcan

Abstract

The Eurozone fiscal crisis has created pressure for institutional harmonization, but skeptics argue that cultural predispositions can prevent convergence in behavior. Our paper derives a robust cultural classification of European countries and utilizes unique data on natives and immigrants. Classification based on genetic distance or on Hofstede’s cultural dimensions fails to identify a single ‘southern’ culture but points to a ‘northern’ culture. Our findings support the relevance of cultural predispositions for financial behavior; and convergence of behavior over time in the face of common institutions, even for countries with great cultural distance from the country that created those institutions.

Suggested Citation

  • Haliassos, Michael & Jansson, Thomas & Karabulut, Yigitcan, 2014. "Incompatible European Partners? Cultural Predispositions and Household Financial Behavior," CEPR Discussion Papers 10039, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10039
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    Cited by:

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    3. Nicola Fuchs‐Schündeln & Paolo Masella & Hannah Paule‐Paludkiewicz, 2020. "Cultural Determinants of Household Saving Behavior," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(5), pages 1035-1070, August.
    4. Huber, Stefanie J. & Schmidt, Tobias, 2022. "Nevertheless, they persist: Cross-country differences in homeownership behavior," Journal of Housing Economics, Elsevier, vol. 55(C).
    5. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    6. Stefanie J. Huber & Tobias Schmidt, 2016. "Cross-Country Differences in Homeownership: A Cultural Phenomenon?," ERES eres2016_47, European Real Estate Society (ERES).
    7. 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.
    8. Asgharian, Hossein & Liu, Lu & Lundtofte, Frederik, 2014. "Institutional Quality, Trust and Stock-Market Participation: Learning to Forget," Working Papers 2014:39, Lund University, Department of Economics.
    9. Davoli, Maddalena & Rodríguez-Planas, Núria, 2020. "Culture and adult financial literacy: Evidence from the United States," Economics of Education Review, Elsevier, vol. 78(C).
    10. Cristian Badarinza & John Y. Campbell & Tarun Ramadorai, 2016. "International Comparative Household Finance," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 111-144, October.
    11. Gaganis, Chrysovalantis & Hasan, Iftekhar & Pasiouras, Fotios, 2020. "National culture and housing credit," Journal of Empirical Finance, Elsevier, vol. 56(C), pages 19-41.
    12. Johan Almenberg & Annamaria Lusardi & Jenny Säve‐Söderbergh & Roine Vestman, 2021. "Attitudes towards Debt and Debt Behavior," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 780-809, July.
    13. Michael Haliassos & Thomas Jansson & Yigitcan Karabulut, 2017. "Incompatible European Partners? Cultural Predispositions and Household Financial Behavior," Management Science, INFORMS, vol. 63(11), pages 3780-3808, November.
    14. 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.
    15. Anastasia Girshina & Thomas Y. Mathä & Michael Ziegelmeyer, 2019. "Peer effects in stock market participation: Evidence from immigration," BCL working papers 137, Central Bank of Luxembourg.
    16. Katherine Hoffmann Pham & Junpei Komiyama, 2022. "Strategic Choices of Migrants and Smugglers in the Central Mediterranean Sea," Papers 2207.04480, arXiv.org.
    17. Luik, Marc-André & Steinhardt, Max Friedrich, 2016. "Immigrant-native differences in stockholding – The role of cognitive and non-cognitive skills," Journal of Empirical Finance, Elsevier, vol. 38(PA), pages 103-119.
    18. Anna Magdalena Korzeniowska, 2021. "Heterogeneity of government social spending in European Union countries," Future Business Journal, Springer, vol. 7(1), pages 1-9, December.
    19. Ammann, Manuel & Cochardt, Alexander Elmar & Straumann, Simon & Weigert, Florian, 2022. "Back to the roots: Ancestral origin and mutual fund manager portfolio choice," CFR Working Papers 22-04, University of Cologne, Centre for Financial Research (CFR).
    20. Chaliasos, Michael & Jansson, Thomas & Karabulut, Yigitcan, 2018. "Financial literacy externalities," IMFS Working Paper Series 127, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    21. Florentsen, Bjarne & Nielsson, Ulf & Raahauge, Peter & Rangvid, Jesper, 2020. "Turning local: Home-bias dynamics of relocating foreigners," Journal of Empirical Finance, Elsevier, vol. 58(C), pages 436-452.
    22. Dossche, Maarten & Kolndrekaj, Aleksandra & Propst, Maximilian & Ramos Perez, Javier & Slacalek, Jiri, 2022. "Immigrants and the distribution of income and wealth in the euro area: first facts and implications for monetary policy," Working Paper Series 2719, European Central Bank.

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    More about this item

    Keywords

    culture; household finance; household portfolios; institutions;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Z1 - Other Special Topics - - Cultural Economics

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