 Does farming culture shape household financial decisions?Sipeng Zeng and Frank Yu Journal of Corporate Finance, 2024, vol. 84, issue C Abstract: Historical rice cultivation practices have shaped cultural norms that significantly affect households' risk-taking behavior today. Using national survey data from over 90,000 Chinese households and a quasi-experimental design, we find that these culturally induced behaviors, in turn, contribute to significant economic differences at a large scale. Our tests show that households in regions with a higher historical rate of rice cultivation are more likely to invest in the financial market and buy lottery tickets, but less likely to buy insurance. The underlying mechanism is that collectivist rice agricultural practices increase trust, social capital, and social connections, and even allow for societal members to borrow without interest. Additional tests show that our findings are not driven by regional economic growth, government-provided social safety nets, Confucian values, or ethnic diversity. These deep-rooted, ancient practices have important policy implications for leaders in collectivist cultures trying to rectify behavioral biases in household financial decisions. Keywords: Household finance; Collectivist culture; Farming culture; Financial investment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:84:y:2024:i:c:s0929119923001827 DOI: 10.1016/j.jcorpfin.2023.102533 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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