Religiosity and Corruption in Bank Lending

50 Pages Posted: 21 Jul 2020

See all articles by Geng Niu

Geng Niu

Southwestern University of Finance and Economics

Weijie Lu

Wuhan University - School of Economics and Management

Yang Zhou

Wuhan University - School of Economics and Management

Hongwu Gan

Hanqing Advanced Institute of Economics and Finance, Renmin University of China

Date Written: June 29, 2020

Abstract

This paper explores the effect of country-level religiosity on corruption in bank lending at the firm level. Using data from the World Business Environment Survey, we find strong and robust evidence that firms in more religious countries perceive a higher level of corruption in bank lending than firms in less religious countries. The economic significance of this effect is comparable to that of other well-known determinants of lending corruption. We further find that the banking market structure affects the relation between religiosity and lending corruption. Our findings are robust to alternative measures of religiosity and lending corruption. Finally, we address endogeneity concerns by using natural disaster exposure as an instrument for religiosity. Our study contributes to a more balanced and comprehensive understanding of the role of religion in finance.

Keywords: Religiosity, Lending Corruption, Banking Market Structure

JEL Classification: G21, Z12, O16

Suggested Citation

Niu, Geng and Lu, Weijie and Zhou, Yang and Gan, Hongwu, Religiosity and Corruption in Bank Lending (June 29, 2020). Available at SSRN: https://ssrn.com/abstract=3638123 or http://dx.doi.org/10.2139/ssrn.3638123

Geng Niu

Southwestern University of Finance and Economics ( email )

55 Guanghuacun Street
Chengdu, Sichuan 610074
China

Weijie Lu

Wuhan University - School of Economics and Management ( email )

Wuhan
China

Yang Zhou

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Hongwu Gan (Contact Author)

Hanqing Advanced Institute of Economics and Finance, Renmin University of China ( email )

Room 308
Mingde Main Building, Renmin University of China
Beijing, Beijing 100872
China

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