The impact of religiosity on corporate loans and maturity structure: evidence from China

Abstract

Purpose This paper aims to examine the relation between religiosity and formal financing in the context of long- and short-term corporate loans. Design/methodology/approach This paper uses archival methodology to conduct a multiple regression analysis with the amount of long- and short-term corporate loans as the dependent variable and a measure of religiosity as the key explanatory variable. Findings This paper offers four findings. First, when a private firm locates in a high religiosity region, it is more likely to get more corporate loans and the amount of corporate loans is positively correlated with the extent of religiosity. Second, religiosity drives a private firm getting more (less) short-term (long-term) loans. Third, a private firm in a high religiosity region is able to incur lower interest cost associated with more short-term loans. Finally, the results are confined to Buddhism, Taoism and Christianity. Practical implications Overall, the findings are consistent with the notion that religiosity shapes the local culture so that individuals, some of them are borrowers and lenders, show the religious traits in the formal lending and borrowing relationship. Originality/value Overall, findings of this paper are consistent with the notion that religiosity shapes the local culture so that individuals, some of them being borrowers and lenders, show religious traits in the formal lending and borrowing relationship.

The moderating effect of religiosity on resource-capability-competitive advantage interaction

“…Talbot (2013) indicates that employees who are experienced and dedicated to their work are valuable assets that farm owners owned, controlled and deployed in order to generate high quality yield. Since religiosity shapes individual behaviour and promotes a social norm that reduces conflict (Croucher, 2011;Jia et al, 2017), farm owners with high religiosity show higher desires to maintain positive work values. Work values in this sense include unbiased functionalities for payment, holiday, promotion and working conditions (Yeganeh, 2015).…”

“…The farm owners viewed themselves as entrepreneurs who are characterised by risk taking, growth orientation and innovation. Jia et al (2017) revealed that when individuals are more religious, they are more willing to bear uncertainties, expand their business activities and growth of their farms and are more willing to search, develop and try new products, markets or methods without concerning much on financial risk. All of these contributed to the competitive advantage of the minor export crop farms.…”

“…Since agricultural activities and environment are inseparable, the farm owners who show concern on environmental issues (such as fertiliser utilisation and harvesting practices) and encourage environmentallyfriendly agricultural practices can gain competitive advantage from physical assets. Further, religion also encourages individuals to practice social values such as honesty, trustworthy and empathy, to name some ( Jia et al, 2017). These values are paramount, especially when the farm owners strive to obtain financial assets such as credit facilities which are required for the operations and purchase of appropriate capital equipment (Lamprinopoulou et al, 2006).…”

Bringing religion back in

“…gender, age, marriage, education and ethnicity) on lending decisions, the public know little about the association between entrepreneurial religious beliefs and bank loans. In fact, previous studies (Du, 2013; Du et al , 2015; Jia et al , 2017) provide insufficient evidence on whether an entrepreneur’s religious belief affects bank lending decisions. This study fills the void by examining the influence of religious entrepreneurs on bank loans using a sample of Chinese family firms.…”

“…Our study is very different from previous studies about religious influence on corporate behavior in the context of China. First, many scholars investigate religious atmosphere (Du, 2013; Du et al , 2015; Jia et al , 2017), measured as the number of temples and monasteries within a specific radius (i.e. 100, 200, 300 km) around a firm’s address.…”