Bitcoin exchanges and cultural analysis

This project analyses co-movement between Bitcoin exchanges in 34 major countries around the world and the US (the global benchmark) over the period January 24, 2011 - January 7, 2019. More specifically, we run IV regressions to investigate the importance of cultural factors (such as tightness, individualism, trust and risk-taking) following an earlier study by Eun et al. (2015) which had shed light on their importance to explain stock co-movement within individual countries.

The results suggest that markets in tighter, more individualistic, trustful and risk-taking societies are more tightly linked to the US one. Further, it appears that culturally looser, collectivistic, trustful and risk-taking countries are more likely to shut down their Bitcoin exchanges compared to other countries. These findings confirm our priors. Our analysis documents the importance of cultural variables as determinants of cross-country Bitcoin price co-movement and exchange shutdown decisions and casts doubt on the reliability of the findings of previous studies (e.g., Katsiampa, 2019; Shams, 2019) which are likely to have been affected by omitted variable bias.