Religiosity and Risk-Taking in International Banking

Journal of Behavioral and Experimental Finance, Volume 7, 2015

46 Pages Posted: 22 Jun 2015 Last revised: 1 Mar 2017

See all articles by Kiridaran (Giri) Kanagaretnam

Kiridaran (Giri) Kanagaretnam

York University - Schulich School of Business

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Chong Wang

University of Kentucky

Dennis J. Whalen

Otterbein College - Department of Business, Accounting & Economics

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.

Keywords: Religion, Risk-Taking, Banking, Financial Crisis, Financial Trouble

JEL Classification: G21, G28, G31, M1

Suggested Citation

Kanagaretnam, Kiridaran and Lobo, Gerald J. and Wang, Chong and Whalen, Dennis, Religiosity and Risk-Taking in International Banking. Journal of Behavioral and Experimental Finance, Volume 7, 2015, Available at SSRN: https://ssrn.com/abstract=2621276 or http://dx.doi.org/10.2139/ssrn.2621276

Kiridaran Kanagaretnam (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Chong Wang

University of Kentucky ( email )

Lexington, KY 40506
United States

Dennis Whalen

Otterbein College - Department of Business, Accounting & Economics ( email )

One Otterbein
Westerville, OH 43081
United States
614-823-1161 (Phone)

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