Chapter 8: The Effect of Religion on Financial and Investing Decisions
Investor Behavior: The Psychology of Financial Planning and Investing. H. Kent Baker and Victor Ricciardi, editors, 135-151, Hoboken, NJ: John Wiley & Sons, Inc. , 2014.
Posted: 9 Jun 2014
Date Written: February 10, 2014
Abstract
Religion has a major impact on people’s daily life and is closely connected with their economic condition. The purpose of this chapter is to discuss the connection between religion and economic factors and to show how religion affects investment and financing decisions. It focuses on this interplay by emphasizing various corporate and personal facets. For instance, the chapter analyzes the effect of religious beliefs on investors’ preferences, risk perception, ethical values, and psychological behavior. This aspect is often missing in academic finance including the behavioral paradigm. Furthermore, the chapter discusses how religious beliefs can conflict with financial theory involving making financial and investing decisions.
Keywords: Religion, socially responsible investment, individual investment decision, investor psychological behavior, corporate finance, behavioral finance, financial psychology, behavioural finance, behavioral economics, behavioural economics
JEL Classification: A12, D81, G00, G30, G10, M00, M10, M41
Suggested Citation: Suggested Citation