The impact of organizational culture on bank stability

Hiep Ngoc Luu (), Lan Thi Mai Nguyen (), Kieu Trang Vu () and Loan Quynh Thi Nguyen ()
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Hiep Ngoc Luu: VNU University of Economics and Business
Lan Thi Mai Nguyen: VinUniversity
Kieu Trang Vu: Institute of Economics and Strategic Management
Loan Quynh Thi Nguyen: Institute of Economics and Strategic Management

Review of Quantitative Finance and Accounting, 2023, vol. 61, issue 2, No 4, 533 pages

Abstract: Abstract This paper examines the impact of organizational culture on bank stability. We rely on the Competing Values Framework (CVF) to identify the four cultural dimensions of banks, namely Control, Collaborate, Compete and Create cultures. Using the textual analysis technique and banks’ annual reports, we obtain organizational culture values in conjunction with the CVF for a large sample of US-listed banks from 1994 to 2020. We find that banks with cultures leaning toward consistency, monitoring, and control practices (i.e., Control-oriented and Compete-oriented cultures) exhibit a higher level of stability. Additional analyses show that Control-oriented banks have higher asset quality and are less risky, whereas Compete-oriented banks have higher asset quality and better financial performance. We also find that the impact of culture on bank stability is more pronounced during “non-crisis” periods and is more prominent for small and medium-sized banks.

Keywords: Bank culture; Textual analysis; Competing values framework; Bank stability (search for similar items in EconPapers)
JEL-codes: G21 G28 M14 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11156-023-01155-2

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