Does Branch Religiosity Influence Bank Risk Taking
Forthcoming in Journal of Business Finance and Accounting
43 Pages Posted: 14 Oct 2016
Date Written: October 6, 2016
Using branch-level data on public and private U.S. banking institutions we investigate the importance of branch religiosity in shaping bank risk-taking behavior. Our results show robust evidence that branch religiosity is negatively related to bank risk-taking. This effect persists after controlling for several bank-level and county-level variables that might correlate with religiosity. Moreover, this result is robust to controlling for headquarter religiosity, suggesting that the effect of branch religiosity is additive and not washed out by headquarter religiosity. Overall, our findings document that headquarter religiosity does not capture the full effect of religiosity on bank behavior, as claimed by previous research, but that the religiosity of the geographic area in which the bank operates significantly influences bank behavior.
Keywords: Religion,Risk taking,Risk aversion
JEL Classification: M41, G21, G32
Suggested Citation: Suggested Citation