Incompatible European Partners? Cultural Predispositions and Household Financial Behavior

68 Pages Posted: 21 Aug 2014

See all articles by Michael Haliassos

Michael Haliassos

Goethe University Frankfurt - Faculty of Economics and Business Administration; CEPR; NETSPAR; Goethe University Frankfurt - Institute for Monetary and Financial Stability (IMFS)

Thomas Jansson

Sveriges Riksbank - Research Division

Yigitcan Karabulut

Frankfurt School of Finance & Management; CEPR

Multiple version iconThere are 6 versions of this paper

Date Written: June 1, 2014

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 to Sweden. Classification based on genetic distance or on Hofstede’s cultural dimensions fails to identify a single ‘southern’ culture but points to a ‘northern’ culture. Significant differences in financial behavior are found across cultural groups, controlling for household characteristics. Financial behavior tends to converge with longer exposure to common institutions, but is slowed down by longer exposure to original institutions.

Keywords: Household Portfolios, Household Finance, Cultural Influences on Economic Behavior

JEL Classification: G11, E21

Suggested Citation

Haliassos, Michael and Jansson, Thomas and Karabulut, Yigitcan, Incompatible European Partners? Cultural Predispositions and Household Financial Behavior (June 1, 2014). Riksbank Research Paper Series No. 116, Available at SSRN: https://ssrn.com/abstract=2476844 or http://dx.doi.org/10.2139/ssrn.2476844

Michael Haliassos

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Theodor-W.-Adorno-Platz 3
PF H32
Frankfurt am Main, D-60323
Germany

CEPR

London
United Kingdom

NETSPAR ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Goethe University Frankfurt - Institute for Monetary and Financial Stability (IMFS) ( email )

Theodor-W.-Adorno-Platz 1
Frankfurt, 60323
Germany

Thomas Jansson (Contact Author)

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden

Yigitcan Karabulut

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

CEPR ( email )

London
United Kingdom

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