Cross-national differences in access to finance: Influence of culture and institutional environments

Raj Aggarwal and John Goodell

Research in International Business and Finance, 2014, vol. 31, issue C, 193-211

Abstract: In spite of rising interest, there is little prior research on the degree to which national differences in access to finance are determined by national culture. Using World Economic Forum survey data for over eighty countries, this paper examines the determinants of (1) access to equity financing, (2) access to loan financing (3) access to venture capital and (4) overall access to capital. We document that less access to financing is associated with the cultural dimensions of uncertainty avoidance and masculinity. But, greater access to financing is positively associated with greater national wealth and better investor protection. Consistent with earlier literature we also find that greater access to finance is associated with greater government favoritism toward selected firms. These results should be of much interest to policy makers, scholars, bankers and managers of multinational firms.

Keywords: Financial institutions; National culture; Legal traditions; Trust (search for similar items in EconPapers)
JEL-codes: G10 G20 N20 O16 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (32)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:31:y:2014:i:c:p:193-211

DOI: 10.1016/j.ribaf.2013.09.004

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