Abstract
We investigate whether cultural tightness, the strength of social norms, provides stock markets with resilience to external shocks. There is tension in forming expectations regarding this. One reasoning, particularly following from cultural archaeology literature, is that societies best cope with challenges, disaster recovery, and loss when they are culturally comfortable with transformation, with cultural tightness arguably opposed to cultural change. On the other hand, alternative reasoning is that tightness allows for societal cohesion that supports optimism to function in a unified way to confront challenge. We test whether markets were supported by cultural tightness during COVID-19 adversity. In accordance with the latter view, we evidence that stock market volatilities during COVID-19 were significantly lower in countries with ‘tighter’ cultures.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.