Does Finance Benefit Society? A Language Embedding Approach

52 Pages Posted: 3 Aug 2020 Last revised: 15 Mar 2023

See all articles by Manish Jha

Manish Jha

Georgia State University - Department of Finance

Hongyi Liu

Washington University in St. Louis - Department of Economics

Asaf Manela

Washington University in St. Louis - John M. Olin Business School; Reichman University

Date Written: June 1, 2022

Abstract

We measure popular sentiment toward finance using a computational linguistics approach applied to millions of books published in eight countries over hundreds of years. We extensively validate this measure both internally and externally. We docu- ment persistent differences in finance sentiment across countries despite ample time- series variation. Books written in the languages of more capitalist countries discuss finance in a more positive context. Finance sentiment is correlated with survey-based measures of financial market participation and income inequality. Finance sentiment declines one year before rather than after financial crises. Positive shocks to finance sentiment lead to greater output and credit growth.

Keywords: sentiment, text analysis, word embedding, BERT, transfer learning, financial crises

JEL Classification: C82, E44, G52, N40, Q54

Suggested Citation

Jha, Manish and Liu, Hongyi and Manela, Asaf, Does Finance Benefit Society? A Language Embedding Approach (June 1, 2022). Available at SSRN: https://ssrn.com/abstract=3655263 or http://dx.doi.org/10.2139/ssrn.3655263

Manish Jha

Georgia State University - Department of Finance ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

HOME PAGE: http://mjha91.github.io

Hongyi Liu (Contact Author)

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States
314-250-7428 (Phone)

HOME PAGE: http://hongyiliu.wixsite.com/myhomepage

Asaf Manela

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-9178 (Phone)

HOME PAGE: http://apps.olin.wustl.edu/faculty/manela

Reichman University ( email )

Israel

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