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Local religious beliefs and bank risk-taking

Author

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  • Abakah, Alex Annan
  • Li, Jiayan

Abstract

This study investigates whether the heterogeneity in religious attributes between Catholics and Protestants reflects in bank risk-taking behavior. We find that banks located in areas with higher concentrations of Catholics relative to Protestants take less risks. The result is robust to several alternative specifications. Further analyses reveal that the result is driven primarily by local banks that operate in only one county. For such banks, local investors are economically more important. We show that these banks make safer investments, which results in fewer write-downs. They also generate less revenue from nontraditional banking activities, which are unsteady revenue sources.

Suggested Citation

  • Abakah, Alex Annan & Li, Jiayan, 2023. "Local religious beliefs and bank risk-taking," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:beexfi:v:40:y:2023:i:c:s2214635023000709
    DOI: 10.1016/j.jbef.2023.100856
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    More about this item

    Keywords

    Local culture; Religious beliefs; Bank risk-taking;
    All these keywords.

    JEL classification:

    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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