Working Paper: CEPR ID: DP10039
Authors: Michael Haliassos; Thomas Jansson; Yigitcan Karabulut
Abstract: The Eurozone fiscal crisis has created pressure for institutional harmonization, but skeptics argue that cultural predispositions can prevent convergence in behavior. Our paper derives a robust cultural classification of European countries and utilizes unique data on natives and immigrants. Classification based on genetic distance or on Hofstede?s cultural dimensions fails to identify a single ?southern? culture but points to a ?northern? culture. Our findings support the relevance of cultural predispositions for financial behavior; and convergence of behavior over time in the face of common institutions, even for countries with great cultural distance from the country that created those institutions.
Keywords: culture; household finance; household portfolios; institutions
JEL Codes: E21; G11; Z1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cultural predispositions (Z13) | Household financial behavior (D14) |
| Cultural differences (Z19) | Financial behavior (G53) |
| Length of stay in Sweden (C41) | Assimilation of migrants' financial behavior (F24) |
| Increased exposure to Swedish institutions (I29) | Reduction in cultural differences (F69) |
| Age at migration (J11) | Assimilation to Swedish financial behavior (G40) |