The Impact of Culture on Government Interventions in the Banking Sector

How does the national culture influence the government interventions across the banking sector? We aim to answer this question, by analyzing a sample of European countries that experienced financial assistance from government during 2008-2018. We find that regulators are more likely to bail out banks in less masculine, less hierarchical, and higher affective autonomous countries. Moreover, when governments intervene, they provide a greater size of financial assistance in countries with these national cultural characteristics, especially if institutions are stronger and the supervisors are more independent. Results are robust to different methods of estimation, subsamples, and additional controls