Religious differences and households' investment decisions. (7th September 2021)

• Record Type: Journal Article
• Authors: Kim, Hohyun; Kim, Kyoung T.; Han, Seung H.
• Is Part Of: Journal of financial research. Volume 44:Number 4(2021)
• Page Start: 753
• Page End: 788
• Publication Date: 2021-09-07
• Subjects: Finance -- Periodicals; Investments -- Periodicals; 332
• DOI: 10.1111/jfir.12260
• Languages: English
• ISSNs: 0270-2592

Abstract

Abstract: This study examines effects of religion on US households' investment decisions, with focusing on the two channels; individual religious belief and local religious culture. We find that Protestants are less likely to invest in stocks than nonreligious households. Catholics are more likely to participate in stock markets than nonreligious households, which is largely driven by Catholic households' greater wealth and older age. Moreover, a higher local Catholic–Protestant ratio (CPratio) is associated with greater stock market participation of the local households, regardless of their own religious preferences. Furthermore, we find that the local CPratio is associated with stock choices—the higher the CPratio, the riskier the stock portfolios. The findings are economically meaningful and they provide salient insights into theory and policy.