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Culture, Openness, and Finance

  • Rene M. Stulz
  • Rohan Williamson

Religions have little to say about shareholders but have much to say about creditors. We find that the origin of a country's legal system is more important than its religion and language in explaining shareholder rights. However, a country's principal religion helps predict the cross-sectional variation in creditor rights better than a country's openness to international trade, its language, its income per capita, or the origin of its legal system. Catholic countries protect the rights of creditors less than other countries, and long-term debt is less important in these countries. A country's openness to international trade mitigates the influence of religion on creditor rights. Religion and language are also important predictors of how countries enforce rights.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8222.

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Date of creation: Apr 2001
Date of revision:
Publication status: published as Stulz, Rene M. & Williamson, Rohan, 2003. "Culture, openness, and finance," Journal of Financial Economics, Elsevier, vol. 70(3), pages 313-349, December.
Handle: RePEc:nbr:nberwo:8222
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