Culture, Openness, and Finance

René M. Stulz, Rohan G. Williamson
2001 Social Science Research Network  
This paper uses religion and language as proxies for culture and investigates how these proxies are related to investor rights. We find that a country's principal religion helps predict the cross-sectional variation in creditor rights better than a country's openness to international trade, its language, its income per capita, or the origin of its legal system. Catholic countries protect the rights of creditors less than other countries and have less private long-term debt. A country's openness
more » ... country's openness to international trade mitigates the influence of religion on creditor rights. Our culture proxies are also important predictors of how countries enforce rights, but they have little correlation with shareholder rights.
doi:10.2139/ssrn.263507 fatcat:d7iv3uougnhlzdsxx53c35abra