Beyond Religion and Culture: The Economic Consequences of the Institutionalization of Sharia Law

45 Pages Posted: 24 Apr 2017 Last revised: 10 May 2019

See all articles by Gabriele Lattanzio

Gabriele Lattanzio

Southern Methodist University (SMU) - Finance Department

Date Written: April 30, 2019

Abstract

Religious and cultural practices have major implications for a Country’s economic performance. However, it is not clear if the institutionalization of these social norms within a country’s legal system causes material economic effects. In this study I show this to be the case. By employing the synthetic control methodology to mitigate endogeneity concerns, I show that the institutionalization of Sharia Law within a Muslim-majority country’s legal system causes material economic costs. Results hold in different settings, confirming that the governmental enforcement of existing social norms constrain individuals’ social and economic freedom, ultimately resulting in worsened economic outcomes.

Keywords: Law and Economics, Islamic Economics and Finance, Synthetic Control Method

JEL Classification: F63, K00, K10, O10, O11, O47, Z10, Z12, Z13, Z18

Suggested Citation

Lattanzio, Gabriele, Beyond Religion and Culture: The Economic Consequences of the Institutionalization of Sharia Law (April 30, 2019). Available at SSRN: https://ssrn.com/abstract=2947185 or http://dx.doi.org/10.2139/ssrn.2947185

Gabriele Lattanzio (Contact Author)

Southern Methodist University (SMU) - Finance Department ( email )

United States

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