National Culture and Default on Mortgages

In this paper, we investigate the relationship between national cultural characteristics and default on mortgages (DOM). Using Hofstede's constructs and controlling for other relevant determinants of DOM, our regression analyses show that borrowers from countries with high individualism may default more on their mortgages in both a relatively stable economic period and during a period of crisis. Moreover, we find that borrowers from societies showing lower level of pragmatism and higher level of indulgence default more on their mortgages in a stable economic period. Our findings suggest important implications for multinational financial institutions that provide mortgages across countries.