Financial Development and Language Structures

Gregory W. Caskey and Nabamita Dutta ()
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Gregory W. Caskey: Tommy & Victoria Baker School of Business, The Citadel, The Military College of South Carolina, 89 Hagood Avenue, Charleston, SC 29409, USA
Nabamita Dutta: Department of Economics, College of Business Administration, University of Wisconsin-La Crosse, 1725 State St., La Crosse, WI 54601, USA

Economies, 2022, vol. 10, issue 12, 1-16

Abstract: Using cross country data, we explore the role of linguistic structures for the financial development of countries. Specially, we investigate if future time reference (FTR), the requirement of an obligatory future tense marking in languages, matters for financial development or not. Our results show that countries speaking weak FTR language or a language not needing a dedicated future tense marking have enhanced financial development relative to countries speaking strong FTR language. Discounting the future less or having a connection between the present and the future—characteristics of weak FTR languages—has implications for caring about saving and investment, having efficient property rights, protection of shareholders and cost of acquiring information. Our results are robust to multiple measures of financial development and inclusion of determinants of the same. Finally, results show that weak FTR language speaking countries benefit more when their financial development is low.

Keywords: linguistic structures; future time reference; financial development; discounting future (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
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