Financial Markets and Genetic Variation

Eric Cardella

Texas Tech University

Ivalina Kalcheva

University of California, Riverside

Danjue Shang

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

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Date posted: March 16, 2014 ; Last revised: February 4, 2016

Suggested Citation

Cardella, Eric and Kalcheva, Ivalina and Shang, Danjue, Financial Markets and Genetic Variation (February 4, 2016). 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 ( 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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