Abstract

http://ssrn.com/abstract=2409500
 


 



Financial Development and Genetic Diversity


Eric Cardella


Texas Tech University

Ivalina Kalcheva


University of California, Riverside (UCR) - Department of Finance and Management Science

Danjue Shang


University of Arizona

March 30, 2015


Abstract:     
It is well documented that there is substantial variation in the level of financial development across countries, which research has been trying to explain. In this paper, we investigate how a deep-rooted characteristic – a country’s degree of genetic diversity – impacts the level of financial development. We hypothesize that a country’s degree of genetic diversity can impact its level of financial development through two channels: (i) directly through its effect on innovation in the financial sector, and (ii) indirectly through its effect on productivity and the subsequent demand for financial development. Extending the argument put forth by Ashraf and Galor (2013), we predict a hump-shaped relationship between a country’s degree of genetic diversity and its level of financial development. Using data from almost 150 countries, our cross-sectional analysis reveals results that are consistent with our prediction; namely, we observe a significant and robust hump-shaped effect of a country’s degree of genetic diversity on its level of financial development. Further, we show that both average years of schooling and the quality of social infrastructure within a country are positively associated with the level of financial development.

Number of Pages in PDF File: 56

Keywords: financial development, genetic diversity

JEL Classification: G1, G2, O1, O4, O5


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Date posted: March 16, 2014  

Suggested Citation

Cardella, Eric and Kalcheva, Ivalina and Shang, Danjue, Financial Development and Genetic Diversity (March 30, 2015). Available at SSRN: http://ssrn.com/abstract=2409500 or http://dx.doi.org/10.2139/ssrn.2409500

Contact Information

Eric Cardella
Texas Tech University ( email )
Rawls College of Business
Lubbock, TX 79409
United States
Ivalina Kalcheva (Contact Author)
University of California, Riverside (UCR) - Department of Finance and Management Science ( email )
900 University Avenue
Riverside, CA 92521
United States
Danjue Shang
University of Arizona ( email )
Department of Finance
Eller College of Management
Tucson, AZ 85721
United States
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