Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors
34 Pages Posted: 20 Dec 2009 Last revised: 22 Nov 2011
Date Written: November 21, 2011
We study the effects of local religious beliefs on mutual fund risk-taking behaviors. Funds located in low-Protestant or high-Catholic areas exhibit significantly higher fund return volatilities. Similar differences persist when we use the religiosity ratios at fund managers’ college locations. Risk-taking associated with local religious beliefs manifests in higher portfolio concentrations, higher portfolio turnover, more aggressive interim trading, and more “tournament” risk-shifting behaviors, but not over-weighting risky individual stocks. Overall, our results suggest that local religious beliefs have significant influences on mutual fund behaviors.
Keywords: Mutual funds, Geographic Location, Religion
JEL Classification: G23, G32, M54, Z12
Suggested Citation: Suggested Citation