Culture, Legal Origins and Financial Development

James B. Ang
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James B. Ang: Department of Economics, Nanyang Technological University, Singapore

No 1809, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: This study proposes that countries with a cultural orientation towards individualism tend to enjoy a higher level of financial development. Estimates based on cross-country data lend strong support to this hypothesis. Specifically, the results indicate that existing disparity in the level of financial development is significantly correlated with variation in the extent of individualism across countries, where a one standard deviation increase in individualism is associated with 0.631 standard deviations improvement in the level of financial development. The results are robust to a number of considerations. Additional results provide some support to the notion that individualistic culture and legal origin may serve as complements rather than substitutes to each other.

Keywords: financial development; individualism; legal origins; trust (search for similar items in EconPapers)
JEL-codes: O40 O50 Z10 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2018-09
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Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:1809

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