New Evidence on National Culture and Bank Capital Structure

43 Pages Posted: 30 Jan 2016 Last revised: 27 Sep 2017

See all articles by Mamiza Haq

Mamiza Haq

University of Queensland - Finance; Financial Research Network (FIRN)

Daniel Hu

University of Queensland

Robert W. Faff

University of Queensland

Shams Pathan

affiliation not provided to SSRN

Date Written: September 27, 2016

Abstract

We examine the nature of impact of national culture on bank leverage using a broad sample of 1,701 banks from 79 countries, over the period 2000-2013, i.e., 18,996 bank-year observations. We find that banks in countries with high individualism culture dimensions hold more leverage while, banks in countries with high uncertainty-avoidance, power distance, and long-term orientation have less leverage. Notably, bank size substantially moderates these cultural effects. Our findings are robust to endogeneity, and alternative proxies for the dependent and core explanatory variables.

Keywords: Bank leverage; National culture; Individualism; Power distance; Uncertainty avoidance; Long-term orientation; Endogeneity

JEL Classification: G01, G21, G28, G32, G38, H63, M14

Suggested Citation

Haq, Mamiza and Hu, Daniel and Faff, Robert W. and Pathan, Shams, New Evidence on National Culture and Bank Capital Structure (September 27, 2016). 2016 Financial Markets and Corporate Governance; Pacific-Basin Finance Journal, 2017. Available at SSRN: https://ssrn.com/abstract=2724221 or http://dx.doi.org/10.2139/ssrn.2724221

Mamiza Haq (Contact Author)

University of Queensland - Finance ( email )

Australia

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Daniel Hu

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Robert W. Faff

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Shams Pathan

affiliation not provided to SSRN

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