Religious Beliefs, Gambling Preferences, and Superstitious Individual Investor Trading Behaviors

Abstract

Using religious festivals in Taiwan as repeated natural experiments, we examine whether the religious beliefs of individual investors influence their trading behaviors. Based on the assumption that religious festivals draw superstitious individual investors participating and make them feel lucky after attending the festival. We find that they have larger trading turnovers and lower investment returns if they have higher gambling preferences. Besides, this effect becomes stronger in preferred stocks of individual investors and lottery-like stocks, supporting that individual investors consider trading as an exciting gambling activity. Overall, our evidence suggests that religious beliefs influence individual investors trading behaviors.

Keywords: Religious beliefs; gambling preferences; individual investors; trading volume; investment return

JEL Classification: G11, G12, G14, G40