Leadership and People Management

National Culture And Financial Systems: The Conditioning Role Of Political Context

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Building on research that addresses why some financial systems are based on banks and others on markets, this study stresses that culturally-based social preferences regarding uncertainty avoidance help explain cross-national differences in financial system configuration. We propose a theory in which political institutions condition this relationship. National culture is a good predictor of financial systems as long as governments are constrained and therefore able to credibly commit to not interfering in the functioning of banks and markets. We adopt a strict definition of culture that focuses only on inherited dimensions, while postulating uncertainty avoidance as a proxy for the societal attitudes that channel those cultural priors. We find that in a political context with unconstrained government, national culture fails to explain financial system variation. In contrast, when political institutions limit governmental action, culturally-driven preferences for uncertainty avoidance affect significantly financial configuration.
Bibliographic citation: Lavezzolo, Sebastián E.; Rodríguez-Lluesma, Carlos; Elvira, Marta, "National Culture And Financial Systems: The Conditioning Role Of Political Context", Journal of Business Research, Vol. 85, 2018, pp 60 - 72

Reference: 10.1016/j.jbusres.2017.12.021 (DOI)
Date: 04/2018
Author(s): Lavezzolo, Sebastián E.; Rodríguez-Lluesma, Carlos; Elvira, Marta
Document type: Article in Journal (refereed)
Languages: English