Financial Markets and Genetic Variation
Texas Tech University
University of California, Riverside
University of Arizona
February 4, 2016
We investigate the extent to which a deep-rooted characteristic of a country – its degree of genetic variation determined by migratory movements of ancient ancestors across the globe – contributes to the observed variation in financial markets across countries. Using data from almost 100 countries, our cross-sectional analysis reveals a significant hump-shaped relation between the predicted genetic variation of a country and the size of a country’s financial markets. Our results are robust to different measures of financial market size, several regression specifications and the inclusion of a broad range of controls such as legal origin, institutional characteristics, culture, natural endowment, and trade openness. Our results regarding the relation between predicted genetic variation and financial market size appear to be restricted specifically to equity markets, as we do not find a statistically significant relation between predicted genetic variation and various measures for debt market size of a country.
Number of Pages in PDF File: 55
Keywords: financial markets, genetic variation, migratory movements
JEL Classification: G1, G2, O1, O4, O5
Date posted: March 16, 2014 ; Last revised: February 4, 2016
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