Individualism and financial inclusion

Weijie Lu, Geng Niu () and Yang Zhou

Journal of Economic Behavior & Organization, 2021, vol. 183, issue C, 268-288

Abstract: Culture affects human behavior in subtle but profound ways. This paper investigates the effects of individualism, one of the most salient cultural dimensions, on household financial inclusion. We first conduct a cross-country analysis and then use an epidemiological approach, involving second-generation U.S. immigrants of different origins, to establish causality. We find that individualism has a strong positive effect on household access to and usage of various offline and online financial services. This cultural effect is more pronounced for individuals with lower socioeconomic status. Furthermore, we show that individualism alleviates mistrust in financial institutions and reduces the reliance on informal networks as sources of financing. These findings suggest that a high level of trust and a weak informal support network may serve as the underlying mechanisms. Our results are robust to a variety of robustness checks.

Keywords: Individualism; Financial inclusion; Digital finance; Mistrust in financial institutions; Epidemiological approach (search for similar items in EconPapers)
JEL-codes: G21 G50 N2 Z10 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:183:y:2021:i:c:p:268-288

DOI: 10.1016/j.jebo.2021.01.008

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