Religiosity and bank performance: How strong is the link?

Using a disaggregated bank-level dataset for India, we explore the impact of religiosity on bank returns and risk. The findings suggest that board religiosity exerts a discernible influence on bank risk, although there is no statistically significant impact on returns. Relatedly, we also explore CEO religiosity interacts with board religiosity and its consequences for bank returns and risk. We find that CEO religiosity are in most instances uncorrelated with bank returns, although depending on their religious affiliation, there is an impact on bank risk. Disaggregated findings indicate that this behavior differs across state-owned and private banks and during periods of global financial crisis. Our findings thus underscore the role and relevance of religion in influencing bank behavior for a large emerging economy whose religious demography is distinctly at variance with those of Western democracies.