Cultural values and the global financial crisis: a missing link?

Abstract

We empirically investigate the role of cultural values on the occurrence of the global financial crisis. We use data based on Hofstede (Culture's consequences: comparing values, behaviors, institutions and organizations across nations, 2001) cultural values indexes and employ two econometric approaches, the self-organizing maps and logit, in a panel set of 38 developed and developing countries. We find that culture has a statistically and economically significant effect on the occurrence of the global financial crisis of 2007-2009. The relationship between cultural factors and the crisis occurrence remains strong when we consider control variables representing different sectors of the economy.