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Religious Activity, Risk Taking Preferences, and Financial Behaviour: Empirical Evidence from German Survey Data

Author

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  • Anja Koebrich Leon

    (Institute of Economics, Leuphana University Lueneburg, Germany)

  • Christian Pfeifer

    (Institute of Economics, Leuphana University Lueneburg, Germany)

Abstract

Individual preferences with respect to risk taking play an important role in financial economic behaviour and, hence, in financial markets. Using German microdata, we argue that individual religiosity is a determinant of household willingness to take risks, since it shapes relevant individual values and norms. Controlling for overall level of general risk assessment, firstly, we find that different religious affiliations are associated with distinct financial risk-taking attitudes. Adherents to the two main Christian religions in Germany (Protestants and Catholics) are less risk-tolerant in general, but not in financial concerns. The same holds for Muslims. Further, religious involvement is associated with higher risk aversion. Secondly, we examine the extent to which religion-induced heterogeneity in risk-taking preferences actually influences investment decisions of individuals in Germany. We provide evidence suggesting that religious beliefs and religious involvement influence individual portfolio decisions.

Suggested Citation

  • Anja Koebrich Leon & Christian Pfeifer, 2013. "Religious Activity, Risk Taking Preferences, and Financial Behaviour: Empirical Evidence from German Survey Data," Working Paper Series in Economics 269, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:269
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    More about this item

    Keywords

    church; religion; risk aversion; portfolio choice;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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