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Cultural Origins of Risk Taking in Financial Markets

Ek, Andreas LU ; Gokmen, Gunes LU and Majlesi, Kaveh LU (2025) In Journal of Financial and Quantitative Analysis
Abstract

This paper studies how cultural heritage influences the differences in risk taking in financial markets. We combine data on the asset allocation of second-generation immigrants in Sweden with risk taking culture in their parents’ countries of origin. We find that descendants of risk loving cultures are more likely to participate in equity markets, and, conditional on participation, allocate a larger share of financial wealth to equities. Moreover, they take on more idiosyncratic risk by favoring directly held stocks over mutual funds and forming more volatile portfolios. These findings are not driven by selective migration or other country of origin characteristics.

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author
; and
organization
publishing date
type
Contribution to journal
publication status
epub
subject
keywords
cultural transmission, culture, diversification, investment behavior, risk preference
in
Journal of Financial and Quantitative Analysis
publisher
Cambridge University Press
external identifiers
  • scopus:105019076683
ISSN
0022-1090
DOI
10.1017/S0022109025102263
language
English
LU publication?
yes
additional info
Publisher Copyright: © 2025 Cambridge University Press. All rights reserved.
id
83133263-d624-4e34-86fd-eb867e7e6a6c
date added to LUP
2026-01-22 11:08:22
date last changed
2026-01-22 11:09:30
@article{83133263-d624-4e34-86fd-eb867e7e6a6c,
  abstract     = {{<p>This paper studies how cultural heritage influences the differences in risk taking in financial markets. We combine data on the asset allocation of second-generation immigrants in Sweden with risk taking culture in their parents’ countries of origin. We find that descendants of risk loving cultures are more likely to participate in equity markets, and, conditional on participation, allocate a larger share of financial wealth to equities. Moreover, they take on more idiosyncratic risk by favoring directly held stocks over mutual funds and forming more volatile portfolios. These findings are not driven by selective migration or other country of origin characteristics.</p>}},
  author       = {{Ek, Andreas and Gokmen, Gunes and Majlesi, Kaveh}},
  issn         = {{0022-1090}},
  keywords     = {{cultural transmission; culture; diversification; investment behavior; risk preference}},
  language     = {{eng}},
  publisher    = {{Cambridge University Press}},
  series       = {{Journal of Financial and Quantitative Analysis}},
  title        = {{Cultural Origins of Risk Taking in Financial Markets}},
  url          = {{http://dx.doi.org/10.1017/S0022109025102263}},
  doi          = {{10.1017/S0022109025102263}},
  year         = {{2025}},
}