Investments Across Cultures: Financial Attitudes of Chinese-Americans

Abstract:     
Cultural background affects the attitudes of immigrants long after they have settled in their new countries, and it affects the attitudes of their descendents as well. For example, levels of trust persist among immigrants to the United States, and relatively high levels of trust among immigrants are associated with relatively high levels of trust in their countries of origin.

Does cultural background affect financial attitudes as well? This is an important question for financial advisors whose clients include people from many cultures. Here we explore the financial attitudes of Chinese-Americans. Chinese-Americans are one group among many that blend the cultures of their countries of origins into the American culture, shaping American culture as it shapes them. Hispanic-Americans are another prominent group, divided into immigrants from Mexico and other countries in Central and South America. But many other immigrants carry their cultures into the United States, including immigrants from India, Ireland, Italy, and Israel. We present this study as a beginning of a stream of studies about the financial attitudes of immigrants, hoping that others would join the effort and add their studies.

For our purposes here, we distinguish between three groups: immigrant Chinese-Americans, first-generation Chinese-Americans, and beyond-first-generation Americans, or beyond-first Americans for short. Immigrant Chinese-Americans were born in China, Hong Kong, or Taiwan. First-generation Chinese-Americans were born in the United States to immigrant Chinese-Americans. Beyond-first Americans were born in the United States to non-immigrant parents, whether of Chinese origins or not. We refer to the first two groups as Chinese-Americans.

We find that Chinese-Americans are less willing to carry debt than beyond-first Americans, more willing to invest in real estate, not as inclined to concentrate their investments in the United States, and more inclined toward distinct gender-based financial responsibilities. Nevertheless, Chinese- Americans find saving no easier than beyond-first Americans, and they are no more risk tolerant than beyond-first Americans. We also find significant differences in financial attitudes between men and women across all groups.

Keywords: behavioral finance, household finance, culture, cross-cultural, risk tolerance, immigrants, Chinese-Americans, savings, gold, real estate

JEL Classification: G00, G19

Accepted Paper Series