Abstract
We examine the impact of religious beliefs on loan repayments in 770 microfinance institutions (MFIs) across 65 countries over the period 2006–2018. We find robust evidence of a negative relationship between religiosity and loan losses in MFIs. We also find that the relationship between religiosity and loan losses is stronger for MFIs in Protestant-dominated countries than in Catholic-dominated countries. Moreover, religiosity improves the operational selfsufficiency of MFIs through a reduction in loan losses. We find that religiosity does not improve the loan repayment behaviour of women borrowers, but it reduces the loan size per borrower. Overall, our evidence suggests that although religiosity reduces loan losses through religiosity-induced lender- risk aversion, it does not improve the loan repayment behaviour of borrowers. We also use several approaches to evaluate our results to the effects of endogeneity.
| Original language | English |
|---|---|
| Pages (from-to) | 657-692 |
| Number of pages | 36 |
| Journal | Review of Quantitative Finance and Accounting |
| Volume | 57 |
| Issue number | 2 |
| Early online date | 18 Feb 2021 |
| DOIs | |
| Publication status | Published - Aug 2021 |
Data Availability Statement
Availability of data and material:Data is publicly available
Keywords
- microfinance institutions
- religiosity
- loan losses
- operational self-sufficiency
- cross-country panel data
Access to Document
- Gyapong_et_al_RoQFA_ReligiosityBorrowerGender_AAM
This is a post-peer-review, pre-copyedit version of an article published in Review of Quantitative Finance and Accounting. The final authenticated version is available online at:https://doi.org/10.1007/s11156-021-00958-5