How Culture Affects Risk Aversion - A Cross-Country Analysis of the Mutual Fund Industry

Sammanfattning: In this paper we examine how cultural aspects affect individuals' investment preferences on a national level. We employ Geert Hofstede's masculinity index to measure these cultural differences and use mutual fund data from 29 countries to determine risk-taking. The funds are examined in a cross country analysis with average values on loadings from the Carhart four-factor model in order to pinpoint different investment strategies relating to risk. We obtain both statistically and economic significant results and conclude that masculine countries are more prone to risky investments in the sense that they index less and use active management to a greater extent.