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The role of religion and social trust in financial development and structure

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  • Frederick Dongchuhl Oh
  • Donglim Shin

Abstract

We examine whether religion influences the financial development and structure of a country. In a sample of 46 countries between 1996 and 2015, we find that religiosity fosters financial development and a market-based financial structure, whereas religious hierarchy and moderate religious heterogeneity induce a lower level of financial development and a more bank-based financial structure. Furthermore, these religious effects are more pronounced for countries with a weaker contractual environment, supporting the ameliorating role of social trust in a contractual environment. Overall, our study provides the first evidence that religion influences financial development and structure through the channel of social trust.

Suggested Citation

  • Frederick Dongchuhl Oh & Donglim Shin, 2026. "The role of religion and social trust in financial development and structure," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 26(4).
    • Handle: RePEc:tcb:cebare:v:26:y:2026:i:4:article:100282
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