This paper aims to examine the relation between religiosity and formal financing in the context of long- and short-term corporate loans.
This paper uses archival methodology to conduct a multiple regression analysis with the amount of long- and short-term corporate loans as the dependent variable and a measure of religiosity as the key explanatory variable.
This paper offers four findings. First, when a private firm locates in a high religiosity region, it is more likely to get more corporate loans and the amount of corporate loans is positively correlated with the extent of religiosity. Second, religiosity drives a private firm getting more (less) short-term (long-term) loans. Third, a private firm in a high religiosity region is able to incur lower interest cost associated with more short-term loans. Finally, the results are confined to Buddhism, Taoism and Christianity.
Overall, the findings are consistent with the notion that religiosity shapes the local culture so that individuals, some of them are borrowers and lenders, show the religious traits in the formal lending and borrowing relationship.
Overall, findings of this paper are consistent with the notion that religiosity shapes the local culture so that individuals, some of them being borrowers and lenders, show religious traits in the formal lending and borrowing relationship.
