National culture and bank risk-taking: Contradictory case of individualism

Pavlo Illiashenko () and Laivi Laidroo

Research in International Business and Finance, 2020, vol. 51, issue C

Abstract: Previous studies have reported a positive association between the cultural dimension of individualism and bank risk-taking. We hypothesize that this association is likely to be confounded by the omitted effects of corporate governance. Given the indicative evidence that such confounders are less likely to affect listed banks, we test this association for a global sample of 467 commercial listed banks from 56 countries. Our results show that the association between individualism and bank risk-taking is negative. This result is consistent with the cushioning hypothesis, the idea that people take on more risk in collectivist societies because they expect to receive help from the members of their social networks in the case of failure.

Keywords: National culture; Individualism; Bank risk-taking; Cushion hypothesis (search for similar items in EconPapers)
JEL-codes: G21 G30 G41 Z10 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:51:y:2020:i:c:s0275531919300704

DOI: 10.1016/j.ribaf.2019.101069

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