Abstract

https://ssrn.com/abstract=2409500
 


 



Financial Markets and Genetic Variation


Eric Cardella


Texas Tech University

Ivalina Kalcheva


University of California, Riverside

Danjue Shang


Utah State University - Department of Economics and Finance; University of Arizona

January 1, 2017


Abstract:     
We investigate the extent to which a country’s degree of genetic variation contributes to the observed variation in financial market activity across countries. We postulate that genetic variation can affect financial markets through its impact on aggregate investment behavior, innovation in the financial sector, and productivity. Our country-level, cross-sectional analysis reveals a significant hump-shaped relation between a country’s predicted genetic variation and the size of its financial markets. This result is consistent with the conjecture that at relatively intermediate degrees of genetic variation, the associated intermediate levels of trust and risk-taking within the country result in the largest investment flows into public 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 main findings appear to be restricted specifically to equity markets (vs. debt markets) where there is relatively more uncertainty and, thus, trust and risk-taking are relatively more important.

Number of Pages in PDF File: 48

Keywords: financial markets, genetic variation, migratory movements

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


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Date posted: January 15, 2017  

Suggested Citation

Cardella, Eric and Kalcheva, Ivalina and Shang, Danjue, Financial Markets and Genetic Variation (January 1, 2017). Available at SSRN: https://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
Utah State University - Department of Economics and Finance ( email )
Logan, UT 84322-1400
United States
University of Arizona ( email )
Department of Finance
Eller College of Management
Tucson, AZ 85721
United States
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