2020/04/03 by Allen N. Berger, Xinming Li, Charles S. Morris +2 · 126 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Psychology · #Bailout #Bank failure #Banking stability, regulation, efficiency #Business #Corporate Finance and Governance #Economics #Endogeneity #Finance #Financial crisis #Financial system #Hofstede's cultural dimensions theory #Individualism #Islamic Finance and Banking Studies #Macroeconomics #Market economy #Market liquidity #Masculinity #Monetary economics #Portfolio #Psychology #Social psychology #Sociology
paper · doi:10.1017/s0022109020000150
published in Journal of Financial and Quantitative Analysis 56(3), 945-993 (Cambridge University Press)
openalex publication_date 2020/04/03 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25
Abstract We conduct the first broad-based international study on bank-level failures covering 92 countries over 2000–2014, investigating national cultural variables as failure determinants. We find individualism and masculinity are positively associated with bank failure, but they operate through different channels. Managers in individualist countries assume more portfolio risk, while governments in masculine countries allow banks to operate with less liquidity and less often bail out troubled institutions. Findings are robust to accounting for endogeneity, different techniques and measures, and additional controls. Results have implications for prudential policies, including regulation, supervision, and bailout strategies, that may partially mitigate some negative effects of culture.