New evidence on national culture and bank capital structure

Abstract

We examine the nature of impact of national culture on bank leverage using a broad sample of 1,701 banks from 79 countries, over the period 2000-2013, i.e., 18,996 bank-year observations. We find that banks in countries with high individualism culture dimensions hold more leverage while, banks in countries with high uncertainty-avoidance, power distance, and long-term orientation have less leverage. Notably, bank size substantially moderates these cultural effects. Our findings are robust to endogeneity, and alternative proxies for the dependent and core explanatory variables.JEL classification: G01; G21; G28; G32; G38; H63; M14

Institutional environment and bank capital ratios

“…A recent study by Haq et al (2017) focused on studying the effect of informal institutions on bank capital structure. Using a large sample of banks in 79 countries, they employ the Hofstede cultural framework to show that national culture 6 significantly affects capital structure of banks.…”

National culture and firm financial performance: A mediating role of firm financing decision

“…There exists the voluminous literature which discussed the national culture as important determinant of different corporate decisions (Haq Mamiza, 2017;Shao Liang, 2010;Wang Daphne, 2014). Similarly, the literature has proven the effect of national culture on capital structure (Chui, 2010) which further affects the corporate performance (Chadha & Sharma, 2015).…”

Cultural Differences as a Reason for Failure of Investment Projects in the Polish Banking Sector

“…Following [13,28] For this test, the researched sample was limited to 26, due to the smaller number of countries represented in the results of House et al [29].…”

“…In more recent years, the concept of organizational culture has also been discussed in the context of banking sectors [8]. The researchers examine the nature of the impact of national culture on bank stability [9], bank performance [10], the quality of banks' earnings [11], bank dividend policies [12], bank leverage [13] etc.…”