Divine Catalysts: Religion and Portfolio Choices

Maxime Bonelli, Pulak Ghosh, Lakshmi Naaraayanan and Purnoor Tak

No 20886, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines how religion influences equity investment and portfolio diversification. We exploit trading sessions held during a major religious festival in India that emphasizes new beginnings and long-term prosperity to examine how religiously framed cues affect individual investor behavior. Individuals whose religion is associated with the festival invest substantially more during these sessions and buy new stocks. Consistent with the emphasis on long-term prosperity, purchases are concentrated in stocks of large, mature, and low-volatility firms, and do not exhibit lottery-like characteristics. These investments are held longer than other portfolio positions and result in persistent increases in portfolio size and diversification. In addition, these purchases represent a larger financial commitment for lower-income individuals and smaller accounts, who subsequently benefit from increased equity exposure. Our findings highlight that religion can nudge individuals towards long-term investments and have implications for wealth accumulation.

Keywords: Investment; behavior (search for similar items in EconPapers)
JEL-codes: G11 G50 Z12 (search for similar items in EconPapers)
Date: 2025-12
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