National Culture and Financial Literacy: International Evidence

Applied Economics, Forthcoming

Posted: 16 Apr 2020

See all articles by Muzaffar Olimjonovich Ahunov

Muzaffar Olimjonovich Ahunov

Endicott College, Woosong University

Leo Van Hove

Vrije Universiteit Brussel (VUB)

Date Written: November 28, 2019


We examine to what extent (aspects of) national culture can explain cross-country variations in financial literacy. Our results, for a sample of 92 countries, show that Hofstede’s dimensions of power distance and individualism explain, respectively, over 40 and 60 per cent – which is substantially more than national cognitive scores and standard economic variables. In particular, we find that financial literacy is lower in countries where power distance is high, and that the opposite is true for individualism. Uncertainty avoidance would seem be negatively related with financial literacy, but the evidence is not so strong. For masculinity, indulgence, and long-term orientation we find no significant impact. Overall, our results highlight the need for additional (interdisciplinary) theories that can improve our understanding of the determinants of financial literacy and better guide policies in this area.

Keywords: Financial Literacy, Financial Development, National Culture, Cross-Country Analysis

JEL Classification: A12, G41, Z10

Suggested Citation

Ahunov, Muzaffar Olimjonovich and Van Hove, Leo, National Culture and Financial Literacy: International Evidence (November 28, 2019). Applied Economics, Forthcoming, Available at SSRN:

Muzaffar Olimjonovich Ahunov (Contact Author)

Endicott College, Woosong University ( email )

27 Baengnyong-ro 57beon-gil
Jayang-dong, Daejeon
Korea, Republic of (South Korea)

Leo Van Hove

Vrije Universiteit Brussel (VUB) ( email )

Department of Applied Economics (APEC)
Pleinlaan 5
Brussels, B-1050
+32 2 614 84 49 (Phone)


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