Does culture affect in the financial decision making of rational man? Chinese vs. Anglo-Saxon Perspective (original) (raw)

Behavioural Finance and Malaysian Culture

International Business Research, 2012

This paper examines how gender, religion, and ethnic differences influence the key determinants of individual investment behavior, which are risk taking, skill, luck, happiness, maximization, regret, confidence and trust. We find that gender difference is significantly associated with risk taking behavior and maximization as well as overconfidence. Religious beliefs and ethnic origins significantly affect life time income risk, regret, maximization, happiness, confidence and trust. However, the addition of these, Malaysian have relatively high level of regret and risk taking propensity in portfolio, and low level of maximization, happiness and general risk taking behavior than non Malaysian.

Investigating the influence of Asian cultural value and financial knowledge on investment behaviours

2020

This study showed the combination of composite Asian cultural value (ACV), kiasuism (“fear of loss”), and the often-associated self-esteem, social intelligence, and achievement orientation exerted an impact on investment decision-making. It further explored the mediating influence of financial knowledge on investing behaviours (namely rational, risk aversion, herding and diversification). This research is novel as it addresses a gap in behavioural research particularly on the influence on ACVs and investing decision-making.In terms of research design, this study employed a purposive sampling method engaging with 463 respondents within the Klang Valley, Malaysia. A voluntary and anonymous quantitative questionnaire utilising a 7-point Likert-like scale was employed to measure the constructs. Due to the exploratory nature and formative constructs used in this study, the PLS-SEM method was implemented to assess the model validity and test the hypotheses. The findings thus showed that k...

National culture and financial systems

Journal of International Business …, 2006

Countries differ in the way their financial activities are organized. In Anglo-Saxon countries such as the U.S. and the U.K., financial systems are dominated by stock markets whereas in Continental Europe and Japan, banks play a predominant role. Why do countries differ in the configuration of their financial systems? We argue that national culture plays a significant role. We find that countries characterized by higher uncertainty avoidance, as an attribute of their national culture, are more likely to have a bank-based system.

Risk-taking in the banking sector: Do cultural differences matter?

Journal of Accounting and Management Information Systems

Research Question: Why the banking sector in some countries experienced more severe panic than the banking sector in other countries? And why some countries recovered faster than others? Motivation: In a response to the global financial crisis, research on the motivation risk-taking or risk-aversion has been increasingly grown to investigate whether culture differences among countries affect the behaviors of individuals inside societies to be risk-taking or riskaversion? Idea: Test the effect of the four cultural dimensions of Hofstede (2001) i.e. (individualism, uncertainty avoidance, power distance and masculinity) on risk-taking in the banking sector. Data: Our sample consists of 2620 bank-year observations of 262 banks from four countries covering the period from (2011 to 2020) collected from Refinitiv Eikon database. Tools: The statistical techniques used are descriptive analysis, correlation and OLS regression. Findings: We found the effect of national culture on risk-taking is significant for all dimensions. Individualism and masculinity are negatively related to risk-taking and uncertainty avoidance is positively related to risk-taking. For power distance dimension, we

Is culture a determinant of financial development

Applied Economics Letters, 2011

The paper investigates the missing link in the literaturewhether informal institutions, or what is known as culture, can affect the level of financial development for a country? Our hypothesis stresses that the cultural dimensions of a country can have an impact on its financial set up. We consider multiple dimensions of culture, identified in the literature by Tabellini, to test our hypothesis. As culture evolve in the form of greater trust, control and other traits, individuals" attitudes towards financial market change, and they engage in greater financial transactions. This, in turn, leads to better financial development. Using quantile estimation technique for a cross-section of 90 countries we find that culture significantly influences the level of financial development. To ensure the robustness of our findings we use Hofstede"s cultural dimension-"uncertainty avoidance index" as an alternative measure for culture. Our results hold for multiple measures of financial development.

Behavioral Finance and Investment Decisions: Influence of Gender, Personality, and Culture

2021

Are human beings always rational? Do they always use the maximum of their cognitive capacities when making important decisions regarding their finances and investment options? Do emotions and biases interfere with one’s capacity of making investment decisions? Are people’s risk tolerance influenced by their psychological properties? These are only a few of the questions that the subject of behavioral finance addresses. Taking the principles from sociology, psychology, and finances, behavioral finance has contributed to the understanding that humans are irrational and their investment decisions are influenced by various behavioral biases and emotions. The present paper aims to understand the specific influences of gender, personality traits, and cultural factors on the investment decisions of people through a review of existing research literature. The findings imply that rather than considering the factors as brought to the forefront by behavioral finance like gender, personality, c...

Culture and decision-making: Investigating cultural variations in the East Asian and North American online decision-making processes

Asian Journal of Social Psychology, 2014

Research in cross-cultural psychology suggests that East Asians hold holistic thinking styles whereas North Americans hold analytic thinking styles. The present study examines the influence of cultural thinking styles on the online decision making processes for Hong Kong Chinese and European Canadians, with and without time constraints. We investigated the online decision making processes in terms of (1) information search speed, (2) quantity of information used, and type of information used. Results showed that, without time constraint, Hong Kong Chinese, compared to European Canadians, spent less time on decisions and parsed through information more efficiently, and Hong Kong Chinese attended to both important and less important information, whereas European Canadians selectively focused on important information. No cultural differences were found in the quantity of information used. When under time constraint, all cultural variation disappeared. The dynamics of cultural differences and similarities in decision making are discussed.

The role of cultural attributes in savings rates

2012

Purpose-The motivation for conducting this research came from the current global economic crisis. One outcome of the crisis is the awareness of the need for a better understanding of what causes people to save. Low savings rates in Western countries in general and in the USA in particular are the roots of the crisis. Furthermore, saving is probably one of the most important economic variables that impact the local and global environment. The current economic literature neglects the crucial impact that culture has on saving as a consequence we do not fully understand the causes of different saving rates in different societies. The purpose of this paper is to explore the variable of cultural attitudes as an explanation for variations in national savings rates. Design/methodology/approach-The phenomenon of diminishing personal savings cannot be explained simply by the variables studied in the current economic literature, such as interest rates, age of the population and wealth as expressed by GDP per capita. This paper explores the role that cultural attributes play in affecting the level of savings in different countries. The paper uses cross-national data to determine the effect of cultural attributes on savings rates. Findings-Cultural variables, particularly the level of uncertainty avoidance and collectivism, have a significant impact on the level of savings. As the level of uncertainty avoidance increases, the level of national savings increases. In addition, the more collectivist the society, the higher the savings rate. Originality/value-Policy makers must realize that simply changing economic factors such as interest rates may not have the desired effect of raising savings rates. They must also take into account the cultural attributes of the country when making policy.

Cross-cultural management of money: The roles of ethnicity, religious affiliation and income levels in asset allocation

This study examines the interplay between ethnicity, religious affiliation, and income levels to understand differences in managing money. Asset allocation decisions among 730 Caucasian and ethnic Chinese were examined. Respondents in Australia, Canada, and China revealed their monetary decisions in an online survey. Multivariate analysis of variance was used to examine differences and interaction effects between ethnic, religious, and income groups. The study found that for the higher-income respondents, asset allocation decisions converged despite differences in ethnic and religious background. In the lower-income segment, asset allocation decisions varied along ethnic lines. These differences were further compounded by their religious background. The implications of this study of management are twofold: the high-income group can be treated as one segment, for example, from the international marketing segmentation perspective. On the other hand, respondents in the low-income bracket diverged in their investment strategies on the basis of ethnicity and religion. As such, they ought to be treated separately according to their values.