 Bank liquidity creation and religious observance: Evidence from Ramadan fastingJournal of Corporate Finance, 2023, vol. 83, issue C Abstract: I examine the effect of religious observance, represented by fasting hours during the month of Ramadan, on bank liquidity creation. I exploit exogenous variation of Ramadan fasting hours that depends on: (1) the timing of Ramadan based on the rotating Islamic calendar; and (2) a country’s latitude. My results document that one additional Ramadan fasting hour reduces bank liquidity creation by 1.1% within countries with the share of Muslim population above 50%. No such effect is found in Muslim-minority countries. In terms of transmission channel, I find that intensified Ramadan fasting reduces the productivity of economic agents that use financial services, hence lower the demand for bank liquidity creation. My results are robust for a battery of sensitivity checks and omitted variables concerns. The results offer novel insights into the effect of a specific religious observance on bank liquidity creation in the Islamic world. Keywords: Bank liquidity creation; Credit supply; Religiosity; Fasting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:83:y:2023:i:c:s0929119923001499 DOI: 10.1016/j.jcorpfin.2023.102500 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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