National culture and risk-taking : Evidence from the insurance industry

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Title: National culture and risk-taking : Evidence from the insurance industry
Author: Gaganis, Chrysovalantis ; Hasan, Iftekhar ; Papadimitri, Panagiota ; Tasiou, Menelaos
Series: Journal of Business Research
Series volume: 97
Series number: April ; 2019
Year of publication: 2019
Publication date: 2.1.2019
Pages: 104-116
Subject (yso): riskit; vakuutusyhtiöt; vakuutus; tavat; kansallinen kulttuuri
JEL: G22; G32; N20; M14
Other keywords: Insurance; Risk-taking; National culture; Hofstede model
Abstract: The gravity of insurance within the financial sector is constantly increasing. Reasonably, after the events of the recent financial turmoil, the domain of research that examines the factors driving the risk-taking of this industry has been signified. The purpose of the present study is to investigate the interplay between national culture and risk of insurance firms. We quantify the cultural overtones, measuring national culture considering the dimensions outlined by the Hofstede model and risk-taking using the ‘Z-score’. In a sample consisting of 801 life and non-life insurance firms operating across 42 countries over the period 2007–2016, we find a strong and significant relationship among insurance firms' risk-taking and cultural characteristics, such as individualism, uncertainty avoidance and power distance. Results remain robust to a variety of firm and country-specific controls, alternative measures of risk, sample specifications and tests designed to alleviate endogeneity.

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