National Culture and Bank Deposits

This paper investigates the relation between national culture and bank deposits. Using annual data (1995–2015) for 99 banks that participated in 2014 stress tests of European Banking Authority, we document relations three cultural traits The effect hierarchy individualism on deposits is stronger (positive negative, respectively) domestic where more homogeneous compared to global banks. On other hand, positive trust robust both banks, reinforcing view banking largely based trust. Results are empirical specifications alleviating endogeneity concerns, thus suggesting a causal effect. Motivated by recent regulatory changes emphasizing importance liquidity (deposit) stability, further analyse impact bank-level deposit stability trust-deposits relation. We show high volatility associated with decrease has levels.