Does national culture affect macroprudential policy? An international investigation of regulatory behavior on macroprudential interventions

Abstract

Using an international sample covering more than 60 countries over 20 years, we provide evidence that national culture has a significant impact on macroprudential interventions. Our empirical findings indicate that regulators are more likely to tighten macroprudential policies in more uncertainty-avoiding countries. In contrast, prudential policies tend to be more relaxed in societies that value masculinity. The positive effect of uncertainty avoidance on macroprudential policy tightness is enhanced in countries with more independent or less forbearing supervisory agencies. Our results suggest that national cultural traits are key drivers of regulatory behavior and contribute to the policy debate on macroprudential toolkits and supervisory practices.