Weijie Lu (鲁维洁), Geng Niu and Yang Zhou (周洋)

Publication:

Journal of Economic Behavior and Organization

Abstract:

Culture affects human behavior in subtle but profound ways. This paper investigates the effects of individualism, one of the most salient cultural dimensions, on household financial inclusion. We first conduct a cross-country analysis and then use an epidemiological approach, involving second-generation U.S. immigrants of different origins, to establish causality. We find that individualism has a strong positive effect on household access to and usage of various offline and online financial services. This cultural effect is more pronounced for individuals with lower socioeconomic status.

Furthermore, we show that individualism alleviates mistrust in financial institutions and reduces the reliance on informal networks as sources of financing. These findings suggest that a high level of trust and a weak informal support network may serve asthe underlying mechanisms. Our results are robust to a variety of robustness checks.

link：https://doi.org/10.1016/j.jebo.2021.01.008