Religiosity and risk-taking in international banking

Kiridaran Kanagaretnam, Gerald J. Lobo, Chong Wang, Dennis J. Whalen

Research output: Journal article publicationJournal articleAcademic researchpeer-review

16 Citations (Scopus)

Abstract

We examine the relationship between religiosity and risk-taking in the international banking sector. Previous research indicates that individuals who are more religious have greater risk aversion. Additionally, prior literature documents a positive relation between religiosity and both financial accounting transparency and timely recognition of bad news. Given timely recognition of future loan losses, religiosity could constrain excessive risk-taking through enhanced internal and external monitoring. We hypothesize and find that banks located in more religious countries exhibit lower levels of risk in their decision-making. We also demonstrate that banks in more religious countries were less likely to encounter financial difficulty or fail during the 2007-2009 financial crisis.
Original languageEnglish
Pages (from-to)42-59
Number of pages18
JournalJournal of Behavioral and Experimental Finance
Volume7
DOIs
Publication statusPublished - 1 Sep 2015
Externally publishedYes

Keywords

  • Banking
  • Financial crisis
  • Financial trouble
  • Religion
  • Risk-taking

ASJC Scopus subject areas

  • Finance

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