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National Culture and Financial Systems

Solomon Tadesse and Chuck Kwok ()

No wp884, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Countries differ in the way their financial activities are organized. In Anglo-Saxon countries such as the U.S. and the U.K., financial systems are dominated by stock markets whereas in Continental Europe and Japan, banks play a predominant role. Why do countries differ in the configuration of their financial systems? We argue that national culture plays a significant role. We find that countries characterized by higher uncertainty avoidance, as an attribute of their national culture, are more likely to have a bank-based system.

Keywords: Financial Systems; Bank-based; Market based; Culture; Uncertainty Avoidance (search for similar items in EconPapers)
JEL-codes: G1 G2 P51 Z1 (search for similar items in EconPapers)
Pages: pages
Date: 2005-03-01
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Journal Article: National culture and financial systems (2006) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2007-884

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