Paper Title
Culture, Bank Supervision, and Investor Protection: Evidence from Financial Crisis
Abstract
This study examines whether two important behavioral attributes, religiosity and linguistic distance (from the English language), are considered by the investors to value bank equity prices during the time of a global financial crisis. We further test whether the level of bank supervision and investor protection could nullify the equity pricing consequence of these two behavioral attributes, based on the premise that in the presence of strong supervision and investor protection, behavioral factors’ influence on stock price could be trivial. Using a comprehensive sample of global banks, we observe that both religiosity and linguistics are considered by investors to value bank equity during a financial crisis, and neither supervision nor investor protection could impact the equity valuation of religiosity and linguistic distance.
Keywords - Culture, Bank Supervision, Investor Protection, Financial Crisis