Does Finance Benefit Society? A Language Embedding Approach

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