Of Religion and Redemption: Evidence from Default on Islamic Loans
Tilburg University - Department of Finance
Tilburg University - CentER, European Banking Center (EBC)
Tilburg University - CentER, European Banking Center (EBC); Centre for Economic Policy Research (CEPR)
June 3, 2012
CentER Discussion Paper Series No. 2012-014
European Banking Center Discussion Paper No. 2012-008
We compare default rates on conventional and Islamic loans using a comprehensive monthly dataset from Pakistan that follows more than 150,000 loans over the period 2006:04 to 2008:12. We find robust evidence that the default rate on Islamic loans is less than half the default rate on conventional loans. Islamic loans are less likely to default during Ramadan and in big cities if the share of votes to religious-political parties increases, suggesting that religion – either through individual piousness or network effects – may play a role in determining loan default.
Number of Pages in PDF File: 71
Keywords: Loan Default, Islamic Loans, Religion, Duration Analysis
JEL Classification: A13, G21, G32, G33, Z12working papers series
Date posted: January 17, 2011 ; Last revised: June 5, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo3 in 0.562 seconds