On the Origins of Financial Development: Ancestral Population Diversity and Financial Risk-Taking

86 Pages Posted: 7 Jul 2020 Last revised: 17 Nov 2021

See all articles by Manthos D. Delis

Manthos D. Delis

Montpellier Business School

Evangelos Dioikitopoulos

King's College London

Steven Ongena

University of Zurich - Department of Banking and Finance; NTNU Business School; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Date Written: July 6, 2020

Abstract

We hypothesize that financial risk-taking originates in preindustrial ancestral population diversity. We use data on immigrants residing in the United States and show that controlling for all known determinants of portfolio decisions and more than 100 control variables, diversity in the country of immigrants’ origin positively affects stock market participation and asset allocation but not the ownership of bonds or savings accounts. Our results remain robust when instrumenting diversity with plant variety. We also identify the channels through which the effect of diversity operates, but also conclude that diversity exerts an independent effect and comprises a positive financial endowment.

Keywords: Stock market participation; Equity share; SIPP; Immigrants; Individualism; Scientific knowledge; Financial endowment.

JEL Classification: G41, O16, Z13

Suggested Citation

Delis, Manthos D. and Dioikitopoulos, Evangelos and Ongena, Steven R. G. and Ongena, Steven R. G., On the Origins of Financial Development: Ancestral Population Diversity and Financial Risk-Taking (July 6, 2020). Swiss Finance Institute Research Paper No. 20-53, Available at SSRN: https://ssrn.com/abstract=3644950 or http://dx.doi.org/10.2139/ssrn.3644950

Manthos D. Delis

Montpellier Business School ( email )

2300 Avenue des Moulins
Montpellier, 34080
France

Evangelos Dioikitopoulos

King's College London ( email )

Strand
London, WC2R 2LS
United Kingdom

Steven R. G. Ongena (Contact Author)

NTNU Business School ( email )

Norway

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
117
Abstract Views
864
rank
300,138
PlumX Metrics