Incompatible European Partners? Cultural Predispositions and Household Financial Behavior
SAFE Working Paper No. 58
43 Pages Posted: 3 Jul 2014 Last revised: 29 Jan 2015
Date Written: January 27, 2015
The Eurozone fiscal crisis has created pressure for institutional harmonization, but skeptics argue that cultural predispositions can prevent convergence in behavior. Our paper derives a robust cultural classification of European countries and utilizes unique data on natives and immigrants. Classification based on genetic distance or on Hofstede’s cultural dimensions fails to identify a single ‘southern’ culture but points to a ‘northern’ culture. Our findings support the relevance of cultural predispositions for financial behavior; and convergence of behavior over time in the face of common institutions, even for countries with great cultural distance from the country that created those institutions.
Keywords: Household Portfolios, Household Finance, Culture and Institutions
JEL Classification: Z1, G11, E21
Suggested Citation: Suggested Citation