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Culture, Legal Origins and Financial Development

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  • James B. Ang

    (Department of Economics, Nanyang Technological University, Singapore)

Abstract

This study proposes that countries with a cultural orientation towards individualism tend to enjoy a higher level of financial development. Estimates based on cross-country data lend strong support to this hypothesis. Specifically, the results indicate that existing disparity in the level of financial development is significantly correlated with variation in the extent of individualism across countries, where a one standard deviation increase in individualism is associated with 0.631 standard deviations improvement in the level of financial development. The results are robust to a number of considerations. Additional results provide some support to the notion that individualistic culture and legal origin may serve as complements rather than substitutes to each other.

Suggested Citation

  • James B. Ang, 2018. "Culture, Legal Origins and Financial Development," Economic Growth Centre Working Paper Series 1809, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    • Handle: RePEc:nan:wpaper:1809
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    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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