Laurent Weill, directeur du LaRGE, va publier prochainement un article dans le "Journal of Financial Services Research", écrit encollaboration avec un doctorant du laboratoire.
We analyze the impact of language on risk-taking behavior of banks. Languages that grammatically distinguish between present andfuture events make the future feel more distant than the present and as thus favor a less future-oriented behavior (Chen, American Economic Review, 2013). Our hypothesis is that these languages lead banks to take more risk since they reduce the perception ofpotential losses associated with risky activities. We investigate this hypothesis on a sample of 1401 banks from 81 countries over the2010–2017 period. We perform random effects regressions of bank risk, measured by the Z-score, on the type of language. We find thatbanks from countries with future tense marking take more risk in accordance with our prediction. This finding is robust to the inclusion ofalternative culture indicators, to alternative definitions of bank risk and of future time reference. We also observe that future tense markingis associated with greater occurrence of banking crises. Our conclusion is thus that language contributes to explain the cross-country differences in bank risk-taking.
The Journal of Financial Services Research publishes high quality empirical and theoretical research on the demand, supply, regulation, and pricing of financial services. Financial services are broadly defined to include banking, risk management, capital markets, mutualfunds, insurance, venture capital, consumer and corporate finance, and the technologies used to produce, distribute, and regulate the seservices. Macro-financial policy issues, including comparative financial systems, the globalization of financial services, and the impact ofthese phenomena on economic growth and financial stability, are also within the JFSR’s scope of interest.