Cross-country differences in stock market development : a cultural view

Although during the last decades the importance of stock markets has increased in all OECD countries, the cross-country differences appear to be remarkably stable. In this paper we relate the factors determining cross-country differences in stock market activity to deeply rooted norms and values in the society, which are represented by the position of countries on cultural dimensions. Stock markets are relatively more important in countries where inhabitants accept more uncertainty and regard competition as a good way of interacting. These attitudes are represented by the national scores on the dimensions of Uncertainty Avoidance and Masculinity. Recent research shows that the differences between countries on these cultural dimensions are very enduring, which suggests that, provided no large shocks occur, the differences in importance of the stock market are likely to persist.

Financial systems, financing constraints and investment: empirical analysis of OECD countries

This paper investigates the influence of cash flow on corporate investment in 11 OECD countries. We find that the sensitivity of investment levels to internally available funds differs significantly across countries, and is lower in countries with predominantly close bank-firm relationships than in countries with predominantly arm's-length bank-firm relationships. At the same time, we find no relationship of the levels of financial constraints to indicators of overall financial development. Our results are consistent with the view that information and incentive problems in the capital market have important effects on corporate investment, and that close bank-firm relationships can reduce these problems and thus improve the access of firms to external finance.

Cross-country differences in stock market development : a cultural view

Although during the last decades the importance of stock markets has increased in all OECD countries, the cross-country differences appear to be remarkably stable. In this paper we relate the factors determining cross-country differences in stock market activity to deeply rooted norms and values in the society, which are represented by the position of countries on cultural dimensions. Stock markets are relatively more important in countries where inhabitants accept more uncertainty and regard competition as a good way of interacting. These attitudes are represented by the national scores on the dimensions of Uncertainty Avoidance and Masculinity. Recent research shows that the differences between countries on these cultural dimensions are very enduring, which suggests that, provided no large shocks occur, the differences in importance of the stock market are likely to persist.