Financial literacy: A comparative study across four countries

This study analysed differences in financial literacy across four countries: Canada, Italy, the UK and the US. The purpose was to understand whether factors associated with financial literacy in one country can be generalized to other countries as well or whether unique national characteristics make it necessary to examine financial literacy in each country individually. A financial literacy index, based on the number of correct answers to four multiple‐choice questions, was used to test the relevance of country of origin to financial literacy. Results suggest significant differences among countries indicating that there are national and cultural differences in what households know and need to know about their personal finances. Policy makers should consider these differences when developing financial literacy assessment tools for their respective countries.     

Cultural Distance and the US Immigrant–Trade Link

Using data from the World and the European Values Surveys, we calculate cultural distances between the US and 54 immigrant home countries and examine the influences of cultural distance and immigrant populations on US imports from and exports to immigrants’ home countries during the years 1997–2004. Our study indicates that, for both US imports and exports, the trade‐enhancing effect of immigrants partially offsets the trade‐inhibiting effect of cultural distance. Further, decomposing our measure of cultural distance into two component dimensions and revisiting the immigrant–trade relationship, we find significant variation in the extent to which immigrants counter the trade‐inhibiting influences of the underlying dimensions of culture for both US imports and exports. Our findings have the implication that by countering the trade‐inhibiting influences of cultural differences between their home and host countries, immigrants exert pro‐development effects.     

Predictors of various facets of sustainability of nations: The role of cultural and economic factors

This study examines the influence of national culture on various facets of a country's sustainability indicators, namely environmental performance, human development, and the avoidance of corruption. At the outset, using exploratory factor analysis from data from 57 countries from the GLOBE cultural practices, we identify three dimensions of culture: performance based culture (PBC), socially supportive culture (SSC) and gender egalitarianism culture (GEC). Then, using hierarchical regression analyses, we explore the role of cultural and economic factors on the various facets of sustainability. Specifically, we find that both PBC and GEC positively influence the environmental performance, even after controlling for wealth of a nation, i.e., GDP. GEC interacts with economic freedom in positively influencing environmental performance. GEC also positively influences human development as does GDP and economic growth rate. Interaction effects are also explored. We finally summarize the implications of the dimensions of culture and economic factors on the sustainability factors, and provide suggestions for future research.     

Cross-Country Differences in Entrepreneurial Activity: The Role of Cultural Practice and National Wealth

In this paper, we argue that national culture is important in interpreting the differences of entrepreneurial activities between countries. Furthermore, national wealth plays a moderating role between national culture and entrepreneurial activities. Datasets from the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project and Global Entrepreneurship Monitor (GEM) study were analyzed. We find that there are interaction effects between GDP, a proxy for national wealth, and several cultural dimensions on entrepreneurial activities. More traditional cultural variables (in-group collectivism, humane orientation, and power distance) enhance early-stage and established entrepreneurship in low- and medium-GDP countries, but hinder early-stage and established entrepreneurship in high-GDP countries. More modernistic cultural variables (performance orientation, future orientation, and uncertainty avoidance) promote high-growth and high-innovation entrepreneurship in some situations, especially in high-GDP countries. Implications and limitations are discussed.     

Culture, economic development, and national ethical attitudes

To understand the influence of culture on ethical attitudes, a variety of countries must be compared simultaneously to avoid confounding of cultural dimensions. This study uses data from the World Values Survey to develop a measure of ethical attitudes that shows partial measurement invariance across 44 countries. Regressing the resulting latent means on four cultural dimensions [Hofstede G. Culture's Consequences: comparing values, behaviors, institutions, and organizations across nations. 2nd ed. Beverly Hills, CA: Sage Publications, 2001] and per capita gross domestic product (PCGDP) reveals effects that are not suggested by examining the predictors in isolation, and explains more variance than analysis of the raw means. However, the model does not account for ethical attitudes reported in Brazil, Japan, and the Philippines. In the remaining 41 countries, uncertainty avoidance, power distance, and PCGDP are found to have negative influences on national ethical attitudes.     

Ethics in countries with different cultural dimensions

This paper compares ethics in countries with different cultural dimensions based on empirical data from 12 countries. The results indicate that dimensions of national culture could serve as predictors of the ethical standards desired in a specific society. The author divided societal cultural practices into desired and undesired practices. According to this study, ethics could be seen as the means for achieving a desired state in a society: for reducing some societal characteristics and increasing others. Finally, a model of the impact of cultural dimensions on desired ethical standards is proposed.     

A glimpse of the complexity of factors that influence financial literacy

Financial literacy has been recognised as a vital life skill, but there is little evidence of the factors behind the differences in managing personal finance. Socio‐economic factors and the provision of financial education do explain the variance in financial literacy in some countries, but not in all. In the PISA 2012 financial literacy test, Estonian students ranked very highly in international comparison; although only a few had received financial education at school. Compared with other countries, socio‐economic factors explained the smallest proportion of variance in the test score. There was, however, a significant difference between the mean financial literacy scores of Estonian‐ and Russian‐language communities. The aim of the article is to analyse the factors behind the differences in financial literacy when financial education is not provided. It also offers insight into how students in a similar education system in two different cultural and language frameworks achieve different financial literacy scores. Moreover, the results demonstrate how indicators, such as family background can work through different channels as opposed to the usual parental education or occupation based socio‐economic indicators. The latter implies that unexplained factors remain, such as cultural, developmental and societal indicators, which most researchers pay little attention to when explaining efficient policies for improving financial literacy. Multivariate regression models show that the level of financial literacy in Estonia is correlated with gender, language of the school, the number of books at home, mathematics and reading scores. The Blinder–Oaxaca decomposition explains less than half of the gap between the two communities. The only variable significantly explaining the gap is the number of books at home. Books can be interpreted as a symbol of social status, evidence of cultural background or source of influence for broader picture and better problem solving skills.     

Language and market inclusivity for women entrepreneurship: the case of microfinance

Inclusive markets are key to fostering female entrepreneurship, and the microfinance sector has recognized and acted on this. Existing research has studied how institutions and organizational factors facilitate the process by which microfinance and other financial intermediaries tackle gender-based financial exclusion. But while the role of cultural institutions has been recognized as important, little research has systematically integrated culture in the study of gender-based financial exclusion. We posit that language is a cultural institution that influences the extent to which financial intermediaries are successful in outreaching women and supporting female entrepreneurship. Inspired by a performativity approach, we develop a set of hypotheses that delineate how a specific feature of language, gender marking in grammar, moderates the role of institutional (state capacity) and organizational (NGO status and global ties) factors in shaping microfinance outreach to women. Using the ratio of female to male borrowers in 2361 microfinance organizations from 115 countries during the period 1995–2015, we confirm that market inclusion of women depends on organizational and institutional factors, and that gender marking in grammar influences those relationships.     

An Analysis of the Impact of Economic Wealth and National Culture on the Rise and Fall of Software Piracy Rates

A number of studies have investigated and found a significant relationship among economic wealth, Hofstede’s national culture dimensions, and software piracy rates (SPR). No study, however, has examined the relationship between economic wealth, culture, and the fact that national SPRs have been declining steadily since 1994. Using a larger sample than has previously been available (57 countries), we confirm the expected negative relationship between economic wealth, culture (individualism and masculinity) and levels of software piracy. The rate of decline in software piracy, however, is found to be a cultural phenomenon, with two factors (power distance (PDI) and uncertainty avoidance (UAI)) working in opposition. Similar results are found for a subset of 37 relatively poor countries. This suggests that, while the rise in economic wealth seen for most countries should lead to a reduction in software piracy, the rate of decline is determined by cultural factors. Global strategies for dealing with software piracy are discussed.     

Multimarket contact and firm performance: The moderating effect of Confucian culture

This paper examines the effect of Confucian cultural value on the relationship between multimarket contact and two dimensions of firm performance, i.e., firms’ innovation and profitability. It is hypothesized that firms with a high level of multimarket contact are more likely to show mutual forbearance towards their competitors, which in turn influences their innovative behavior and financial performance. Taking into account the possible moderating effects of Confucian cultural value, we also hypothesize that the effect of multimarket contact is more pronounced among firms from the Confucian culture. In other words, it is argued that firms from the Confucian culture are more likely to innovate and obtain better financial performance. Empirical tests were conducted after the hypotheses, and the findings support the arguments on multimarket contacts and mutual forbearance hypotheses. Through facilitating tacit collusion, multimarket contact does seem to help create superior economic performance.     

Identifying financially illiterate groups: An international comparison

Targeted policy interventions are more effective than one‐size‐fits‐all initiatives. This paper proposes the use of k‐means cluster analysis to identify vulnerable groups with respect to financial literacy. Using a rich sample of 12 countries, we distinguish 4 groups with varying financial literacy levels, and examine their socio‐economic characteristics. The results suggest that individuals in the most vulnerable financially illiterate groups are on average, single, less‐educated and unemployed with low incomes. This contrasts with those in the strongest group: individuals with the highest financial knowledge, financial behaviour and financial attitudes scores are on average highly educated males who live together with a partner. They earn a high income and hold several financial products. Integrating these insights into national strategies which promote financial literacy will not only lead to more effective but also to more efficient policy initiatives by focusing on the particular weaknesses of certain subgroups and using the appropriate transmission channels.     

文化距离会阻碍文化服务输出吗？ ——基于2006~2012 年跨国数据的检验

本文利用2006~2012年216个国家间的文化服务贸易数据检验了文化距离对国家间文化服务贸易的影响。研究显示,以Hofstede国家文化维度测量的文化距离会显著阻碍国家间总体文化服务贸易的发展;互联网的普及和国家间说同种语言人口比例的上升会部分抵销文化距离带来的负向作用。具体来看,文化距离对文化信息服务存在显著负向作用,对文化产品再生产或分配许可贸易会产生正向作用;不同维度的文化距离对文化服务贸易的影响也存在显著异质性。     

Cross-country differences in ICT adoption: A consequence of Culture?

The diffusion of information and communication technology (ICT) has witnessed a surge in recent years. The rate of adoption across countries diverges considerably regardless of the income levels. In this paper, we attempt to explain the differences in ICT adoption rates across countries by using Hofstede's cultural framework. The effect of culture on ICT adoption is explored by applying two different measures of ICT adoption, namely the average share of ICT spending in GDP across 42 countries, and per capita computer across 49 countries. The results suggest that the national culture and the ICT adoption rate of a country are closely related. It appears that most of the Hofstede dimensions are important in influencing ICT adoption, thereby confirming our hypotheses. In particular, the power distance and the uncertainty avoidance dimensions seem to be the most important ones. These results are robust in both datasets, even after controlling for levels of education and income.     

Financial literacy and savings decisions by adult financial consumers in Zimbabwe

We use survey data from a sample of 4000 adult financial consumers in Zimbabwe to analyse the determinants of financial literacy and its effect on individual's savings decisions. Results show that women have lower financial literacy than men. Furthermore, individuals' residing in rural areas exhibit lower financial literacy compared with urban financial consumers. Financial literacy and financial services interventions targeting women and rural individuals should be strengthened. Econometric results show that financial literacy positively influences savings behaviour for both rural and urban individuals. Furthermore, financial literacy positively influences informal and formal savings. Policy interventions that foster financial literacy are needed to improve individuals saving behaviours.     

Financial literacy and the cost of borrowing

This research investigates the relation between financial literacy and the cost of borrowing via credit cards and mortgage loans among US consumers. This is a departure from previous studies that have focused on levels of debt in relation to human capital, either financial knowledge or education. Data from the Consumer Finance Monthly (CFM) survey are used to specifically examine the effect of financial literacy on borrowing rates for credit cards and mortgages controlling for other human capital influences. The CFM is a national survey, rich in American consumer credit information, and includes a comprehensive instrument specifically designed to measure financial literacy. Results indicate that those who are financially literate are about twice as likely to have lower costs of borrowing for both credit cards and mortgage loans.     

Where does ESG pay? The role of national culture in moderating the relationship between ESG performance and financial performance

This study investigates the moderating role of a country’s culture as an external contingency factor in the relationship between a firm’s environmental, social, and governance (ESG) performance and financial performance. Using ESG performance data of 4978 firms from 48 countries for 17 years, we argue that the financial return from engaging in ESG varies depending on the countries’ cultural aspects because stakeholder evaluations and appreciations for a firm’s ESG performance differ across nations. We find that a country that espouses a culture of high individualism or masculinity tends to appreciate and reflect on this more explicitly, strengthening the relationship between a firm’s ESG performance and financial performance. Contrastingly, in a country with a culture of high power distance or uncertainty avoidance, firms’ ESG efforts are less likely to be associated with financial performance. Our findings have important implications for multinational enterprises facing various cultural environments when dealing with heterogeneous stakeholder demands across countries.     

The Effect of National Culture on the Adoption of Innovations

Studies on the adoption of innovations by companies generally include micro-level and meso-level variables. This study adds to the literature by investigating the role of national culture (i.e. a macro-level variable) to explain differences in adoption rates across countries. In particular, we investigate the effects of the five Hofstede culture dimensions and the culture dimensions proposed by Hall on country adoption rates. Hypothesized effects were tested using a large-scale empirical study concerning the adoption of Enterprise Resource Planning (ERP) software by mid-size companies covering ten European countries. Results indicate that variables describing national culture have a significant influence on the country adoption rates.     

Improving national cultural indices using a longitudinal meta-analysis of Hofstede's dimensions

This meta-analysis offers an updated set of national cultural scores along the dimensions of Hofstede's cultural framework. The meta-analytic national cultural indices have two advantages. First, they are based on a larger and more representative sample than that used in Hofstede's or any other cross-cultural comparison study. The data come from 451 empirical studies representing over 2000 samples comprising over half a million individuals from 49 countries and regions. Second, cultural change is addressed by offering separate sets of indices for different decades. This would be helpful in longitudinal studies of the interplay between culture and other phenomena. The meta-analytic indices are validated against a set of external criteria.     

Financial Literacy as More than Knowledge: The Development of a Formative Scale through the Lens of Bloom's Domains of Knowledge

For well over a decade, financial literacy has been a primary lens through which researchers approach financial education. Unfortunately, in most cases, this potentially rich construct is reduced to mere financial knowledge. This myopic conceptualization hampers the development of the concept and programs to build financial literacy. Despite research that reveals these limits, the field has either persisted with this narrow definition of financial literacy or abandoned the model altogether in favor of capability or similar constructs. Using Bloom's domains of knowledge, we redefine financial literacy as the combination of three different indicators reflecting three domains of knowledge: financial skill, self‐efficacy, and explicit knowledge. Using data from a national survey, we apply the methods of formative scale development to construct and validate a more robust conceptualization and measurement of financial literacy. We explore how this financial literacy index might inform development of innovative financial education programs.     

On the Importance of National Culture for the Design of Information Systems

In this contribution a literature review is conducted to illustrate how national culture influences phases of the design of information systems. For this purpose, we review the literature in order to identify reliable and commonly approved findings as well as still open remaining questions. Fundamentally, our literature review is a comprehensive framework that sets typical dimensions of system design as well as main types of cultural research in relation to each other. The existing research results in the area of national culture are classified along the levels of system design and attributed to typical phases of the design of information systems. It thus becomes apparent that in the domain of culture and information system design it is often only the design subject or the design object that is addressed. Contributions that connect both levels rarely exist. In our review, only a limited number of publications could be identified that covered concrete phases of the development providing system design, implementation, as well as verification and validation. From a theoretical perspective, there is an obvious dominance of Hofstede??s cultural dimensions that well address single topics of the design, such as user interface and inter cultural problems in development teams. Other domains, however (e.g., technology and architecture), are inadequately explained. Further, a predominantly phenomenological focus becomes obvious. The observed cultural phenomena and the connected interpretations are usable in a limited way for concrete development initiatives. The contribution ends with the vision of a theory for the culturally sensitive design of socio-technical information systems that absorbs current scientific knowledge and unites it in a structured approach.