Physics

Mathematics

Statistics

Political science

Economics

Individualism

Standard deviation

Legal culture

Variation (astronomy)

Astrophysics

Market economy

Individualistic culture

Collectivism

Economic Inquiry

This study proposes that countries with a cultural orientation toward individualism tend to enjoy a higher level of financial development. Estimates based on cross‐country data lend strong support to this hypothesis. Specifically, the results indicate that existing disparity in the level of financial development is significantly correlated with variation in the extent of individualism across countries, where a one standard deviation increase in individualism is associated with 0.631 standard deviations improvement in the level of financial development. The results are robust to a number of considerations. Additional results provide some support to the notion that individualistic culture and legal origin may serve as complements rather than substitutes to each other. ( JEL O40, O50, Z10)

CULTURE, LEGAL ORIGINS, AND FINANCIAL DEVELOPMENT