On the origins of financial development: Ancestral population diversity and financial risk-taking

Manthos Delis (), Evangelos Dioikitopoulos and Steven Ongena

No 20-53, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We show that risk-taking originates in preindustrial ancestral population diversity. We use data on immigrants residing in the United States and show that controlling for all known determinants of portfolio decisions, diversity positively affects stock market participation and asset allocation but not the ownership of bonds or savings accounts. The diversity effect relates to the level of individualism and knowledge in the origin country. Nevertheless, diversity is significant in the presence of more than 100 control variables or when instrumenting diversity with plant variety. Overall, deep-rooted factors unrelated to contemporary social and economic conditions affect risk-taking.

Keywords: Stock market participation; Equity share; SIPP; Immigrants; Individualism; Scientific knowledge (search for similar items in EconPapers)
JEL-codes: G41 O16 Z13 (search for similar items in EconPapers)
Pages: 78 pages
Date: 2020-07
New Economics Papers: this item is included in nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2053

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