Of Religion and Redemption: Evidence from Default on Islamic Loans (Baele L., Farooq M., Ongena S.)

Household Strategies Islamic Banking

Abstract We study default rates on conventional and Islamic loans using a comprehensive monthly dataset from Pakistan that follows more than 150,000 loans over the period 2006:04 to 2008:12. We find robust evidence that the hazard rate on Islamic loans is less than half the hazard rate on conventional loans. Across duration models we include a variety of loan contract, borrower, and bank characteristics, where possible combined with time, borrower, bank and/or borrower-bank fixed effects. In big cities Islamic loans default less likely if the share of religious parties increases, suggesting that religious motivation may determine loan default.
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Libref/ Baele L., Farooq M., Ongena S. (2010) "Of Religion and Redemption: Evidence from Default on Islamic Loans", European Banking Center Discussion Paper No. 2010-32, pp. 1 - 46
© Программирование — Александр Красильников, 2008
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