Faculty Research
International Finance and National Culture
Dealing with Uncertainty and
Ambiguity
Dr. Chuck C.Y. Kwok, professor of
international business, is currently working on a series of papers examining how national culture
affects a country’s financial structure and consumption patterns. Kwok has collaborated with others
on this research with the support of a CIBER grant. The first three papers, which examine capital
structure, financial systems, and insurance consumption, have already been accepted and/or
published by the
Journal of International Business Studies (JIBS) as cited
below.
Kwok’s most recent paper, scheduled for publication by JIBS in January 2008, examines national culture and its influence on insurance consumption. Kwok observed that people in some countries tend to buy more insurance, particularly life insurance, while people in other countries are more reluctant to buy it. “Consumer behaviour literature highlights a stream of research that indicates that culture tends to have a strong impact on individual behaviour under conditions of uncertainty and ambiguity,” said Kwok.
Kwok tested his research hypotheses empirically using Dr. Geert Hofstede’s cultural dimensions and data from 1976-2001 across 41 countries. The findings show that individualism has a significant, positive effect on life insurance consumption, while power distance and masculinity/femininity have significant, negative effects.
“The results are robust even after controlling for economic, institutional, and demographic determinants. We find that there is a clear implication of national culture,” said Kwok. “In cultures that support high levels of individualism, people purchase more life insurance. In cultures that are more collectivistic and believe in the social network, people take care of each other and, therefore, do not see the need for life insurance.”
This information has a practical, vital application for a multinational corporation in the insurance industry. The data provides valuable guidance in determining which markets to penetrate or which ones will be easier to access.
Kwok's published papers on this topic:
— Chui, Andy C.W., Lloyd, Alison E. and Kwok, Chuck C.Y. (2002) “The Determination of Capital Structure: Is National Culture a Missing Piece to the Puzzle?” Journal of International Business Studies. 33(1): 99-127.
— Kwok, Chuck C.Y. and Tadesse, Solomon. (2006) “National Culture and Financial Systems.” Journal of International Business Studies. 37: 227-247.
— Chui, Andy C.W. and Kwok, Chuck C.Y. Forthcoming. “National Culture and Life Insurance Consumption.” Journal of International Business Studies. January 2008.
Dr. Chuck C.Y. Kwok, professor of
international business, is currently working on a series of papers examining how national culture
affects a country’s financial structure and consumption patterns. Kwok has collaborated with others
on this research with the support of a CIBER grant. The first three papers, which examine capital
structure, financial systems, and insurance consumption, have already been accepted and/or
published by the
Journal of International Business Studies (JIBS) as cited
below.
Kwok’s most recent paper, scheduled for publication by JIBS in January 2008, examines national culture and its influence on insurance consumption. Kwok observed that people in some countries tend to buy more insurance, particularly life insurance, while people in other countries are more reluctant to buy it. “Consumer behaviour literature highlights a stream of research that indicates that culture tends to have a strong impact on individual behaviour under conditions of uncertainty and ambiguity,” said Kwok.
Kwok tested his research hypotheses empirically using Dr. Geert Hofstede’s cultural dimensions and data from 1976-2001 across 41 countries. The findings show that individualism has a significant, positive effect on life insurance consumption, while power distance and masculinity/femininity have significant, negative effects.
“The results are robust even after controlling for economic, institutional, and demographic determinants. We find that there is a clear implication of national culture,” said Kwok. “In cultures that support high levels of individualism, people purchase more life insurance. In cultures that are more collectivistic and believe in the social network, people take care of each other and, therefore, do not see the need for life insurance.”
This information has a practical, vital application for a multinational corporation in the insurance industry. The data provides valuable guidance in determining which markets to penetrate or which ones will be easier to access.
Kwok's published papers on this topic:
— Chui, Andy C.W., Lloyd, Alison E. and Kwok, Chuck C.Y. (2002) “The Determination of Capital Structure: Is National Culture a Missing Piece to the Puzzle?” Journal of International Business Studies. 33(1): 99-127.
— Kwok, Chuck C.Y. and Tadesse, Solomon. (2006) “National Culture and Financial Systems.” Journal of International Business Studies. 37: 227-247.
— Chui, Andy C.W. and Kwok, Chuck C.Y. Forthcoming. “National Culture and Life Insurance Consumption.” Journal of International Business Studies. January 2008.