How Language Shapes Bank Risk Taking

Francis Osei-Tutu and Laurent Weill

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: We analyze the impact of language on risk-taking behavior of banks. Our hypothesis is that languages that grammatically distinguish between present and future events lead banks to take more risk. We investigate this hypothesis on a sample of 1,402 banks from 82 countries over the 2010-2017 period. We find that banks from countries with future tense marking take more risk in accordance with our prediction. This finding is robust to the inclusion of alternative culture indicators, to alternative definitions of bank risk and of future time reference.

Keywords: Banking; financial stability; language. (search for similar items in EconPapers)
JEL-codes: G21 Z13 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ban
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Journal Article: How language shapes bank risk taking (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2019-03

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