Where Angels Fear to Trade: The Role of Religion in Household Finance

Luc Renneboog () and C. Spaenjers
Additional contact information
C. Spaenjers: Tilburg University, Center for Economic Research

No 2009-34, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: Although the relationship between religion and economic development on the macro-level has been investigated, it is less clear how religious background influences economic attitudes and financial decision-making on the level of the individual or household, the micro-level. We use panel data from the extensive DNB Household Survey, covering the period from 1995 to 2008, to investigate whether – and through which channel – religious denomination affects household finance in the Netherlands. We find evidence that, in general, religious households care more about saving, are more risk-averse, consider themselves more trusting, have a more external locus of control, and have a stronger bequest motive. Furthermore, Catholics and Protestants have longer planning horizons, and Protestants and Evangelicals seem to have a greater sense of individual financial responsibility. Most of these factors matter for household financial decision-making, albeit to differing degrees. Using our religion variables as instruments for economic attitudes (and controlling for demographic and background risk characteristics), we demonstrate that the above-mentioned differences in economic beliefs and preferences explain the higher propensity to save by religious households in general and the lower investments in risky assets by Catholic households.

JEL-codes: A1 D1 Z1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-cul, nep-ltv and nep-soc
Date: 2009
View list of references

Downloads: (external link)
http://arno.uvt.nl/show.cgi?fid=95006 (application/pdf)

Related works:
Working Paper: Where Angels Fear to Trade: The Role of Religion in Household Finance (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:dgr:kubcen:200934

Access Statistics for this paper

More papers in Discussion Paper from Tilburg University, Center for Economic Research
Series data maintained by Corry Stuyts ().