Cultural and Financial Management

This paper will scrutinizes the actual impact of culture on financial management. Before I proceed to what I believe to be not only a factually inept argument of cultural influence on economics but also a grossly delusional and rather prejudiced view as well, I must first set some sort of context to what I am alluding to. The assignment stipulates for me to, address if the framework of financial management can apply to any country or culture. The simple and short answer to this is “no”, financial management is different depending on the country and or culture. For example Germans don’t buy into the same type of capital structure that North Americans do, nor do Muslims have the same type of financial system to that of the west. Simply put various cultures and countries have different financial institutions and or governments, as well as various different values, attitudes and preferences. More broadly the assignment asks me to discuss the role of culture in finance, which I find not to have a true correlation to economics or its financial institutions.

First let me state that I am not alone in my beliefs on this issue. Many economists are reluctant to consider culture because it is too broad and vague to enter the economic discourse with a testable hypothesis (Guiso, Sapienza & Zingales 2006 p.1). This has however not stopped the insurgence of sociologists entering the realm of economics with more powerful measuring tools to back their exaggerated claims of a cause and effect, of culture on economics. Specifically these sociologists and economists dispute Marx’s claim that “The mode of production of material life conditions the social, political and intellectual life process in general” (Marx 1859). In other words economic condi...

... middle of paper ...

...act but the reasons and questionable data provided to support such a hypothesis is not sufficient for a direct correlation to occur, consequently do to such weak and morally questionable arguments.

Reference list

Dar, A.H., & Presley, R.J. (2001) Lack of Profit Loss Sharing in Islamic Banking: Management and Control Imbalances, Loughborough University

Diamond, J. (1997) Guns, Germs and Steel: A short history of everybody for the last 13,000 years, London: Vintage, 2005

Guiso, L., Sapienza, P., & Zingales, L. (2006) DOES CULTURE AFFECT ECONOMIC OUTCOMES?, The Journal of Economic Prospective

GRAY, J.S. (1988) Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally University of Glasgow, Scotland

Marx, Karl (1859) A Contribution to the Critique of Political Economy, International Publishers, New York, 1979,