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National Culture and Financial Systems

Author

Listed:
  • Solomon Tadesse

    ()

  • Chuck Kwok

    ()

Abstract

Countries differ in the way their financial activities are organized. In Anglo-Saxon countries such as the U.S. and the U.K., financial systems are dominated by stock markets whereas in Continental Europe and Japan, banks play a predominant role. Why do countries differ in the configuration of their financial systems? We argue that national culture plays a significant role. We find that countries characterized by higher uncertainty avoidance, as an attribute of their national culture, are more likely to have a bank-based system.

Suggested Citation

  • Solomon Tadesse & Chuck Kwok, 2005. "National Culture and Financial Systems," William Davidson Institute Working Papers Series wp884, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2007-884
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    Keywords

    Financial Systems; Bank-based; Market based; Culture; Uncertainty Avoidance;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • Z1 - Other Special Topics - - Cultural Economics

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