Religiosity, borrower gender and loan losses in microfinance institutions: a global evidence

ORCID Identifiers

0000-0003-2544-7741

Document Type

Article

Source of Publication

Review of Quantitative Finance and Accounting

Publication Date

1-1-2021

Abstract

© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC part of Springer Nature. We examine the impact of religious beliefs on loan repayments in 770 microfinance institutions (MFIs) across 65 countries over the period 2006–2018. We find robust evidence of a negative relationship between religiosity and loan losses in MFIs. We also find that the relationship between religiosity and loan losses is stronger for MFIs in Protestant-dominated countries than in Catholic-dominated countries. Moreover, religiosity improves the operational self-sufficiency of MFIs through a reduction in loan losses. We find that religiosity does not improve the loan repayment behaviour of women borrowers, but it reduces the loan size per borrower. Overall, our evidence suggests that although religiosity reduces loan losses through religiosity-induced lender-risk aversion, it does not improve the loan repayment behaviour of borrowers. We also use several approaches to evaluate our results to the effects of endogeneity.

ISSN

0924-865X

Publisher

Springer Science and Business Media LLC

Disciplines

Business

Keywords

Cross-country panel data, Loan losses, Microfinance institutions, Operational self-sufficiency, Religiosity

Scopus ID

85101066566

Indexed in Scopus

yes

Open Access

no

Link to Full Text

Share

COinS