Discussion Paper Details

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Title: Incompatible European Partners? Cultural Predispositions and Household Financial Behavior

Author(s): Michael Haliassos, Thomas Jansson and Yigitcan Karabulut

Publication Date: June 2014

Keyword(s): culture, household finance, household portfolios and institutions

Programme Area(s): Financial Economics

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.

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Bibliographic Reference

Haliassos, M, Jansson, T and Karabulut, Y. 2014. 'Incompatible European Partners? Cultural Predispositions and Household Financial Behavior'. London, Centre for Economic Policy Research.