Of religion and redemption: Evidence from default on Islamic loans

Lieven Baele, Moazzam Farooq and Steven Ongena

Journal of Banking & Finance, 2014, vol. 44, issue C, 141-159

Abstract: We compare default rates on conventional and Islamic loans using a comprehensive monthly dataset from Pakistan that follows more than 150,000 loans over the period 2006:04 to 2008:12. We find robust evidence that the default rate of Islamic loans is less than half the default rate of conventional loans. Islamic loans are less likely to default during Ramadan and in big cities if the share of votes to religious-political parties increases, suggesting that religion – either through individual piousness or network effects – may play a role in determining loan default.

Keywords: Loan default; Islamic loans; Religion; Duration analysis (search for similar items in EconPapers)
JEL-codes: A13 G21 G32 G33 Z12 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (126)

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Related works:
Working Paper: Of religion and redemption: Evidence from default on Islamic loans (2014)
Working Paper: Of Religion and Redemption: Evidence from Default on Islamic Loans (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:44:y:2014:i:c:p:141-159

DOI: 10.1016/j.jbankfin.2014.03.005

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