Bringing religion back in

Abstract

Purpose The purpose of this paper is to investigate the influence of religious entrepreneurs on bank loans and further examine the moderating effect of entrepreneurial gender. Design/methodology/approach In 2010, the Chinese national survey reported the different religious beliefs of private entrepreneurs. Using this set of survey data, the authors obtain a sample of 4,330 Chinese family firms and employ the Tobit regression approach to examine the relationship between the amount of bank loans and the religious background of entrepreneurs. In addition, the authors use the propensity score matching approach to address the endogeneity issue. Findings Based on the data from the 2010 national survey, the authors document that the amount of bank loans is significantly higher for Chinese family firms with religious entrepreneurs than for their counterparts. This finding suggests that religious individuals are inclined to be more ethical and honest and Chinese family firms with religious entrepreneurs transfer soft information to banks, and eventually lenders favor religious entrepreneurs with more bank loans. Moreover, the authors reveal that the amount of bank loans is significantly larger for firms with female entrepreneurs than for those without female entrepreneurs. In addition, entrepreneurial gender attenuates the positive relationship between religious entrepreneurs and bank loans. Originality/value This study is one of few studies to examine the influence of an entrepreneur’s religious belief on bank credit decisions and adds to previous studies about religious influence on corporate behavior by revealing a positive association between religious entrepreneurs and bank loans. Moreover, this study validates that female entrepreneurs exert positive effects on the amount of bank loans and attenuate the positive influence of religious entrepreneurs on bank loans.

Understanding debt financing decisions in family firms – Are there new insights from the recent literature?

“…, 2018). Finally, a few authors have taken into consideration a differentiation between financial and non-financial debt (Du and Zeng, 2019; Molly et al. , 2019; Gao et al.…”

“…The conclusions are opposite from the supply point of view. Du and Zeng (2019) find that the amount of bank loans is significantly larger for Chinese FFs with female entrepreneurs, as banks may recognise their ability to reduce default risk. Extant studies confirm that firms with high female participation in top management teams are more likely to follow accounting regulations and achieve more accurate future cash flow predictions, suggesting better earnings quality.…”

“…In addition, some studies distinguish between market and book value of the leverage ratio in samples of listed firms (ElBannan, 2017;Amin and Liu, 2020;Muhammad et al, 2021), or use the net loans variable over total assets (Jara et al, 2018). Finally, a few authors have taken into consideration a differentiation between financial and non-financial debt (Du and Zeng, 2019;Molly et al, 2019;Gao et al, 2020;Baixauli-Soler et al, 2021).…”

“…On the other hand, regarding the debt supply side, the lenders' perception of risk in businesses helps to make a decision on whether to lend or not and the cost of the debt (Du and Zeng, 2019). Due to the long-term orientation of family businesses, their commitment with the continuity of the company and the belief that the overlapping of ownership and management reduces agency costs, lenders could facilitate FFs to access debt, probably at a lower cost.…”

The Mediating and Moderating Effect on Smes' Performance: Does Religiosity Matter?

“…Such entrepreneurs tend to comply with rules and codes of ethics. Religious entrepreneurs are inclined to be more ethical and honest (Du and Zeng, 2019) and more responsible in investment behaviour (Li et al, 2019) to lead to good performance. Religious entrepreneurs will have good manners for customers.…”