Journal of Business Accounting and Finance Perspectives

This paper attempts to empirically investigate and interpret the NPLs of EU countries based on a combination of economic and socio-cultural characteristics, as depicted by Hofstede’s “6 Cultural Dimensions”. Estimates are made for the period 2000–2019 for eight EU countries, four of which are in Southern Europe (Greece, Italy, Spain, Portugal) and four are in Central Europe (Germany, France, the Netherlands and Belgium). Special emphasis is placed on Greece, due to the importance of NPLs in this country. The findings are in accordance with those of previous relevant research, and the combination of economic and cultural characteristics provided a more in-depth NPL analysis. Full article

The literature regarding cultural background change points out that changes in cultural background can only be slow moving. However, under high uncertainty levels, cultural background may change in the short or medium term as well. In this paper, the effects of uncertainty on cultural behaviors are investigated. Cultural background is captured through the Schwartz’s cultural values, based on the waves provided by the European Social Survey from 2002 up to 2018, performing relative Principal Component Analyses. An Uncertainty Index is constructed based on the volatility of the stock market for all Eurozone countries, from the euro’s adoption in January 2001 up to December 2018. Using an unbalanced panel dataset comprised of 18 Eurozone countries for the time period from 2002 up to 2018, a fixed-effects assessment method, different fixed terms between the examined economies, dummies per wave of the nine total data waves of the European Social Survey and country-specific clustered robust estimates of the standard errors, the main conclusions of the empirical analysis are the following: (a) Uncertainty significantly affects the cultural background of societies and leads to its change; (b) The effects of uncertainty on culture start two years after an uncertainty shock has occurred; (c) The effects of uncertainty on specific cultural values reveals significant effects on all Schwartz’s cultural values. However, the effect is the highest for the dipole “conservatism and autonomy” and the smallest for the dipole “mastery vs. harmony”. (d) When uncertainty is high, this leads to higher levels of hierarchy (authority, humbleness), self-direction (independent thought and action), stimulation (excitement, novelty and challenge in life), affective autonomy (pursuit of actively positive activities: pleasure, exciting life) and mastery (ambition and hard work, daring, independence, drive for success) which means their life’s harmony is disrupted, at least two years later. Thus, countries exhibiting systematically high levels of uncertainty are about to develop a cultural background that is going to hinder economic development, and vice versa. Full article

The present paper delineates an explanatory framework for the defining factors of incentives, both financial and nonfinancial, through the theory of human economic action and that of personality traits, which shape human goals and, ultimately, social identity. It is ascertained that three types of variables affect incentives: basic conditions (cultural change, etc.), basic values and needs (tradition, external values, etc.) and the dynamism of social identity, which includes the goals that are set. More specifically, the two basic variables that shape the incentives for human action and imbue dynamism in behavior relate to megalothymia—i.e., the need for acknowledgement of a person’s integrity along with the predisposition to be thought superior to others as well as the aspiration to a certain level of quality in life. Full article

The aim of this paper is to evidence that non-economic factors, such as culture, emotions and ethics, can be seen as an important force in influencing human economic behavior and human action. This is conducted by putting the homo economicus notion into the perspective of the history of economic thought and, more specifically, of John Stuart Mill. More specifically, Mill’s institutional individualism, as is presented in his System of Logic (1843), and his relativity of economic doctrines construction, as is included in his Principles of Political Economy (1848), are synoptically delineated. Through Mill’s analysis, it is supported that cultural differences between different states of societies are determinant in understanding different behaviors. The paper concludes that Mill’s historical specificity and his more pluralistic version of cultural–institutional methodological individualism are more compatible in understanding human decision making. Full article

This article analyses the relationship between the documented momentum effect on the Bulgarian Stock Exchange and the cultural characteristics of Bulgarian society on the basis of the 6-Dimensions Culture Model by Hofstede. Derived are possible behavioural biases, that could cause investors to underreact to firm-specific information, resulting in short-term return predictability. Outlined are implications for the relation between the rising of momentum effect and low individualism index, as identified on the Bulgarian Stock Exchange (BSE). Full article

Mainstream economists concede that finance tests the deductive powers of the microfoundations model. Accordingly, we attempt to derive a structural model inductively through use of empirical studies and history. Culture is the means by which a task is set about. The term consists of the following elements. The unit of analysis is groups or classes as found in National Income accounts. The connection between them does not consist of substitution effects or conflict but complementarities and cooperation. Secondly, the economy is defined as the inseparable composite of the fiscal and the monetary authorities and the components of the private sector. Finally, finance eases the flow of production and consumption and investment. However, banks are beset with problems of asymmetric information and runs. Additionally, market finance is prone to bubbles and crashes. Elements of culture are required to hold fast during the interactions between the financial and the real world. Full article

When culture and institutions coevolve, which means that these are changing simultaneously and in the same direction, financial development is facilitated. In contrast, when institutions and the cultural background deviate from this development, their asynchronous and different direction changes may lead to a series of failed attempts to implement a modernized financial development framework. Thus, the purpose of the paper is to highlight whether the institutional and cultural backgrounds operate in a complementary or substitute way in terms of their role in financial development. An unbalanced panel dataset comprising 98 countries over the last four decades (1981–2019) is used. The empirical results indicate that both the institutional background and the cultural background positively affect financial development. Furthermore, there is a complementary relationship between the institutional background and the cultural background in terms of their role in financial development; when both sizes are at a strong level, this leads to the highest level of financial development, while when at least one or both are at a weak level, the financial development is lower. Moreover, the interaction term of the two sizes has a positive and statistically significant effect on financial development in all tests performed. Lastly, the institutional background seems to have a greater impact on the formation of the level of financial development in relation to the cultural background. To upgrade the financial development of their economies, policymakers have to realize economic policies that change the institutional background and simultaneously change the cultural background in the same direction. Full article