On August 9th, Pavlo Illiashenko, a PhD student at TalTech’s Department of Economics and Finance, defended his doctoral thesis, titled “Essays in Behavioral Finance: National Culture and Economic Populism”. The thesis adopts an interdisciplinary approach to address a contradiction in findings between cross-cultural psychology and corporate finance, as well as to provide novel empirical evidence about the households’ political attitudes and saving behavior.
The thesis consists of three published articles:
The first publication, "Tough Guy" vs. "Cushion" Hypothesis: How does Individualism Affect Risk-taking?", published in the Journal of Behavioral and Experimental Finance, takes a hypothesis from the field of cross-cultural psychology and tests it within the framework of finance research. The results are in line with the "cushion hypothesis" presented by Hsee and Weber (1999), suggesting that people from individualistic cultures exhibit greater risk aversion than their counterparts in collectivistic societies, a contrast to the prevailing consensus in the field of corporate finance.
The second publication, "National Culture and Bank Risk-taking: Contradictory Case of Individualism," published in Research in International Business and Finance, re-examines the relationship between national culture and corporate risk appetite, drawing insights from the prior publication. Adopting the methodology from previous corporate finance studies and applying it to a homogeneous sample of publicly traded banks across 56 nations, the study finds a negative correlation between individualism and bank risk behaviors. The result runs contrary to the previous findings in corporate finance and is in line with the conclusion of the first publication.
The third publication, "Left-wing Economic Populism and Savings: How Attitudes Influence Forward-looking Financial Behavior?" in Eastern European Economics, connects the fields of political science and household finance by examining the populism-centric attitudes as potential determinants for household saving behavior. The study finds that that a measure of individuals' populism attitudes is an important predictor of households' decision to save on the top of a broad set of socioeconomic and behavioral factors.
Supervisors:
Associate Professor Laivi Laidroo (primary supervisor), Associate Professor Tõnn Talpsepp (co-supervisor)
Opponents:
Professor Anneli Kaasa (School of Economics and Business Administration, University of Tartu, Tartu, Estonia)
Professor Matti Keloharju (Department of Finance, Aalto University, Espoo, Finland)
The doctoral thesis is available here: LINK
https://digikogu.taltech.ee/en/Item/ec801c74-aa23-4e54-9f06-0b0ebacaee25
This work has received funding from the European Union Social Fund, the DoRa programme, Doctoral School in Economics and Innovation, Tallinn University of Technology ASTRA project, TTÜ Development Program 2016-2022, Grant/Award Number: 2014-2020.4.01.16-0032, TalTech University grant B57 “Efficiency in Financial Sectorin Light of Changing Regulatory Environment”, the European Union’s Horizon 2020 Research and Innovation programme under Grant Agreement No 952574.