Download this Paper Open PDF in Browser

Religious Beliefs, Gambling Attitudes, and Financial Market Outcomes

82 Pages Posted: 31 Jan 2009 Last revised: 4 Apr 2011

Alok Kumar

University of Miami - School of Business Administration

Jeremy K. Page

Brigham Young University

Oliver G. Spalt

Tilburg University - Department of Finance

Date Written: April 1, 2011


We use religious background as a proxy for gambling propensity and investigate whether geographical variation in religion-induced gambling norms affects aggregate market outcomes. We examine four economic settings in which the recent literature has suggested a role for gambling and speculation. Our key conjecture is that gambling propensity would be stronger in regions with higher concentration of Catholics relative to Protestants. Consistent with our conjecture, we find that religion-induced gambling preferences influence the portfolio decisions of institutional investors. Investors located in regions with high Catholic-Protestant ratio (CPRATIO) exhibit a stronger propensity to hold stocks with lottery features. Further, in a corporate setting, we show that broad-based employee stock option plans, which are likely to appeal more to employees with stronger gambling preferences, are more popular in high CPRATIO regions. Examining the aggregate impact of gambling on stock returns, we find that the initial day return following an initial public offering is higher for firms located in high CPRATIO regions where local speculative demand is expected to be stronger. In a broader market setting, we find that the magnitude of the negative lottery-stock premium is larger in high CPRATIO regions. Collectively, our results indicate that religious beliefs, through their influence on gambling attitudes, impact investors' portfolio choices, corporate decisions, and stock returns.

Suggested Citation

Kumar, Alok and Page, Jeremy K. and Spalt, Oliver G., Religious Beliefs, Gambling Attitudes, and Financial Market Outcomes (April 1, 2011). EFA 2009 Bergen Meetings Paper; Journal of Financial Economics (JFE), Forthcoming. Available at SSRN:

Alok Kumar (Contact Author)

University of Miami - School of Business Administration ( email )

514 Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)


Jeremy Page

Brigham Young University ( email )

Marriott School of Management
685 TNRB
Provo, UT 84602
United States
801-422-7173 (Phone)


Oliver Spalt

Tilburg University - Department of Finance ( email )

Department of Finance
Tilburg University
Tilburg, 5000 LE
+31 13 466 3545 (Phone)


Paper statistics

Abstract Views