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Miss Roxana Mihet
This paper investigates the effects of national culture on firm risk-taking, using a comprehensive dataset covering 50,000 firms in 400 industries in 51 countries. Risk-taking is found to be higher for domestic firms in countries with low uncertainty aversion, low tolerance for hierarchical relationships, and high individualism. Domestic firms in such countries tend to take substantially more risk in industries which are more informationally opaque (e.g. finance, mining, IT). Risk-taking by foreign firms is best explained by the cultural norms of their country of origin. These cultural norms do not proxy for legal constraints, insurance safety nets, or economic development.
Miss Roxana Mihet

Identification Test: Foreign vs. Domestic Firms IX. Concluding Remarks X. References Tables 1. Correlation Matrix of National Cultural Dimensions 2. Industry Informational Opacity 3. Correlation Matrix between National Culture and Governance Indicators 4. Correlation Matrix between National Culture and Protection Mechanisms 5. Correlation Matrix between National Culture and Industry Indicators 6. Effects of National Culture on Corporate Risk-Taking 7. Accentuating/Moderating Factors 8. Foreign Firms’ Risk-Taking Behavior and Culture Appendix A

Miss Roxana Mihet

I. Introduction Understanding whether national culture affects a society’s likelihood to generate risk-seeking firms is important for effective policy-making and for improving corporate governance. It can enrich discussions on government policies that encourage entrepreneurship and innovation. A grasp of the impact of cultural influences on corporate risk-taking would allow policy-makers to better customize their policies for firms with different risk appetites, thus promoting more competitive business environments. Understanding the impact of culture on

Rima Turk

in tangible assets (41.66%) and they exhibit great variability in average profitability and tax rates. We also analyze the pairwise correlations among our variables and present the results in Table 4 . We first observe that the correlation coefficients between our key dependent variables (financial decisions and investment outcomes) and most of the other variables are less than 0.1 in absolute terms, and that our two alternative measures of corporate risk taking, Risk 1 and Risk 2 strongly positively correlate (at correlation coefficient of 0.637). High

Rima Turk
This paper analyzes how differences in legal origin, judicial efficiency, and investor protection affect firm leverage and earnings volatility across developing countries. Using a large number of developing countries, four main findings are highlighted. First, firms in civil legal origin countries rely more on debt financing compared to firms in common law countries, and they exhibit lower earnings volatility. Second, under weak judicial enforcement, firms tend to borrow more but they take less risk. Third, stronger creditor rights increase debt financing and reduce earnings volatility. Fourth, firm listing on a developed stock exchange shifts the capital structure towards more equity financing, and it increases the firm’s ability to borrow more when the judicial system is inefficient. The results reinforce the importance of strengthening laws and institutions as well as deepening capital markets in developing countries to improve financing conditions and investment outcomes.
Morales R. Armando

willing to provide financing to economic agents. Better transparency and disclosure allow for better-informed decisions by firms, including on lending and borrowing. Protection of minority shareholders reduces the scope for internal conflicts within the firm, including on leverage choices. The channels through which governance and financing are interrelated can be classified as follows: Risk taking . Firms are more willing to take risks in a better corporate governance environment. Corporate risk taking and firm growth seem to be positively related to the quality of

Ms. Ratna Sahay and Mr. Martin Cihak
Women are underrepresented at all levels of the global financial system, from depositors and borrowers to bank board members and regulators. A new study at the IMF finds that greater inclusion of women as users, providers, and regulators of financial services would have benefits beyond addressing gender inequality. Narrowing the gender gap would foster greater stability in the banking system and enhance economic growth. It could also contribute to more effective monetary and fiscal policy. New evidence suggests that greater access for women to and use of accounts for financial transactions, savings, and insurance can have both economic and societal benefits. For example, women merchants who opened a basic bank account tend to invest more in their businesses, while female-headed households often spend more on education after opening a savings account. More inclusive financial systems in turn can magnify the effectiveness of fiscal and monetary policies by broadening financial markets and the tax base. The paper also studies the large gaps between the representation of men and women in leadership positions in banks and in banking-supervision agencies worldwide. It finds that, shockingly, women accounted for less than 2 percent of financial institutions’ chief executive officers and less than 20 percent of executive board members. The analysis suggests that, controlling for relevant bank- and country-specific factors, the presence of women as well as a higher share of women on bank boards appears associated with greater financial resilience. This study also finds that a higher share of women on boards of banking-supervision agencies is associated with greater bank stability. This evidence strengthens the case for closing the gender gaps in leadership positions in finance.
Ms. Ratna Sahay and Mr. Martin Cihak

. 22. Previous studies also suggest that female executives may be more cautious than male executives in making corporate decisions . For example, Faccio, Marchica, and Mura (2016) , for a broad corporate sample, find that firms run by female CEOs have lower leverage, less volatile earnings, and a higher chance of survival than otherwise similar firms run by male CEOs. Additionally, transitions from male to female CEOs are associated with significant reductions in corporate risk-taking. Huang and Kisgen (2013) , using a U.S. corporate sample, find that male

Minsuk Kim, Rui Mano, and Mr. Mico Mrkaic

Firm Dynamics ,” CEPR Discussion Paper 12654, C.E.P.R. Discussion Paper . Sebnem Kalemli-Ozcan , Amanda Liu , Ilhyock Shim . 2018 . “ Exchange rate appreciations and corporate risk taking ,” BIS Working Paper, No.710 . Tong , Hui , Shang-Jin Wei . 2019 . “ Endogenous corporate leverage response to a safer macro environment: The case of foreign exchange reserve accumulation ,” NBER Working Papers 26545 , National Bureau of Economic Research , Inc . Ye , Min , Elaine Hutson , Cal Muckley . 2014 . “ Exchange rate regimes

Dyna Heng, Anna Ivanova, Rodrigo Mariscal, Ms. Uma Ramakrishnan, and Joyce Wong
This paper examines the state of financial development in the Latin America and Caribbean (LAC) region as well as potential growth and stability implications from further development. The analysis suggests that access to financial institutions has expanded notably in the past decade, and the region compares favorably with other emerging market regions on this dimension. The region, however, continues to lag behind peers on broader financial development, especially with respect to markets, though there is substantial heterogeneity across countries. Financial systems in many LAC countries are also underdeveloped relative to their macroeconomic fundamentals. Further financial development could convey net benefits to the region, provided there is adequate regulatory oversight to prevent excesses.