Abstract
This paper examines the role of culture in households’ saving decisions. Exploiting the historical language borders within Switzerland, I isolate the effect of households’ exposure to certain cultural groups from economic, institutional, demographic and geographic factors for a homogeneous and representative sample of households. The analysis uses the Swiss Household Panel which I complement with geographic and socio-economic data. I show that low- and middle-income households located in the German-speaking part are more than 12 percentage points more likely to save than similar households in the French-speaking part. I show that these differences across language regions are consistent both with different distributions of time preferences, and norms of obtaining formal and informal consumer credit during times of financial distress.
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