The Effect of Religious Prohibitions on Economic Behavior

78 Pages Posted: 25 May 2019

See all articles by Sera Linardi

Sera Linardi

University of Pittsburgh

Rebecca Morton

New York University (NYU) - Wilf Family Department of Politics

Kai Ou

Florida State University

Xiangdong Qin

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Gumilang Aryo Sahadewo

Universitas Gadjah Mada - Faculty of Economics and Business

Date Written: April 29, 2019

Abstract

We conducted a multi-country experiment on whether a reminder of the Islamic prohibition on interest induces lenders to choose Profit-Loss Sharing arrangements (PLS) as an alternative. We find that 1) Muslims are more likely to choose PLS than non-Muslims; 2) they do so when interest rates are high, and 3) the reminder of the prohibition increases the use of PLS by Muslims (particularly if highly religious and/or female). The evidence also suggests that the subjects' reaction to the reminder is more in the spirit of the law (be charitable to borrowers) than in the letter of the law (choose PLS).

JEL Classification: C90, D00, D64, D91, O10, Z12

Suggested Citation

Linardi, Sera and Morton, Rebecca and Ou, Kai and Qin, Xiangdong and Sahadewo, Gumilang Aryo, The Effect of Religious Prohibitions on Economic Behavior (April 29, 2019). Available at SSRN: https://ssrn.com/abstract=3379815 or http://dx.doi.org/10.2139/ssrn.3379815

Sera Linardi

University of Pittsburgh ( email )

135 N Bellefield Ave
Pittsburgh, PA 15260
United States

Rebecca Morton

New York University (NYU) - Wilf Family Department of Politics ( email )

715 Broadway
New York, NY 10003
United States
212-998-3706 (Phone)

Kai Ou (Contact Author)

Florida State University ( email )

Tallahasse, FL 32306
United States

Xiangdong Qin

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

No.535 Fahuazhen Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200052
China

Gumilang Aryo Sahadewo

Universitas Gadjah Mada - Faculty of Economics and Business ( email )

Jalan Humaniora 1
Bulaksumur
Yogyakarta, Daerah Istimewa Yogyakarta 55281
Indonesia

HOME PAGE: http://sahadewo.wordpress.com

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