Abstract
This chapter focuses on the relevance of national culture in bank risk-taking decisions. The analysis considers the European banking system and aims to study how different cultural values across countries may affect bank risk-taking. Using firm-level data from 28 EU countries and employing an OLS analysis, we show that individualism has a positive association with bank risk-taking and uncertainty avoidance has a negative association with bank risk-taking. We also find that the large dimension of banks weakens the association of culture with bank risk-taking. The empirical evidence reveals that even in the highly globalized European financial system, with uniform rules of supervision and risk management across countries and in crises times, culture matters.
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