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Religion, Social Capital, and Business Bankruptcy in the United States, 1921-1932

Author

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  • Bradley A. Hansen
  • Mary Eschelbach Hansen

Abstract

We consider the value of social capital that derives from membership in a church. American states with larger churchgoing populations had lower business bankruptcy rates from 1921 to 1932, and states in which the churchgoing population was concentrated in few churches had business bankruptcy rates that were lower still. Both voluntary and involuntary bankruptcy were lower in states with higher church membership. The evidence suggests that church membership acted on bankruptcy through a safety net mechanism and not solely through indicating a preference for honoring commitment.

Suggested Citation

  • Bradley A. Hansen & Mary Eschelbach Hansen, 2008. "Religion, Social Capital, and Business Bankruptcy in the United States, 1921-1932," Working Papers 2008-15, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:1508
    DOI: 10.17606/ffkw-nk58
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    File URL: https://doi.org/10.17606/ffkw-nk58
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    Citations

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    Cited by:

    1. Paul Bishop, 2017. "Spatial variations in personal insolvency choices: The role of stigma and social capital," Urban Studies, Urban Studies Journal Limited, vol. 54(16), pages 3738-3754, December.
    2. K. Parboteeah & Sascha Walter & Jörn Block, 2015. "When Does Christian Religion Matter for Entrepreneurial Activity? The Contingent Effect of a Country’s Investments into Knowledge," Journal of Business Ethics, Springer, vol. 130(2), pages 447-465, August.
    3. Feng, Yuruo & Hao, Wei & Fang, Jiali & Wongchoti, Udomsak, 2024. "In the radiance of enlightenment: The influence of nontheistic religions on corporate default risk," Emerging Markets Review, Elsevier, vol. 60(C).
    4. Hansen, Mary Eschelbach & Hansen, Bradley A., 2012. "Crisis and Bankruptcy: The Mediating Role of State Law, 1920–1932," The Journal of Economic History, Cambridge University Press, vol. 72(2), pages 448-468, May.

    More about this item

    Keywords

    business bankruptcy; church membership; social capital;
    All these keywords.

    JEL classification:

    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
    • N82 - Economic History - - Micro-Business History - - - U.S.; Canada: 1913-
    • K29 - Law and Economics - - Regulation and Business Law - - - Other

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