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The impact of national culture on systemic risk

Alin Marius Andries and Daniela Balutel
Authors registered in the RePEc Author Service: Alin Marius Andrieș

Economic Systems, 2022, vol. 46, issue 2

Abstract: We investigate the effects of national culture on systemic risk using a comprehensive dataset from global banks in 58 countries over the period 2003–2016. Our results reveal that systemic risk measures are associated with cultural values. In particular, our results show that individualism and masculinity are the main drivers of banks' contribution to systemic risk. In addition, the impact of cultural variables on the systemic risk measures is nonlinear. This variation may be driven by both information in the national cultural measures and the skewness of the systemic risk measures. The findings have implications for prudential policies: designing uniform prudential and regulatory policies in banking to avoid financial distress for countries with heterogeneous cultures might not have the desire impact; rather, they might be more effective if the type of culture in each individual country is considered.

Keywords: Financial stability; Individualism; Masculinity; National culture; Power distance; Systemic risk (search for similar items in EconPapers)
JEL-codes: D85 G01 G21 (search for similar items in EconPapers)
Date: 2022
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Working Paper: The impact of national culture on systemic risk (2022)
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DOI: 10.1016/j.ecosys.2022.100972

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