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Earthly Reward to the Religious: Religiosity and the Costs of Public and Private Debt

  • Feng Jiang, Kose John, C. Wei Li and Yiming Qian


We document that a firm’s culture, specifically, its religiosity, affects its cost of debt. Firms in higher-religiosity counties have higher credit ratings and lower debt costs. The impact of religiosity is stronger for firms with greater information asymmetry and during recessions. Further, religiosity has additional explanatory power for the cost of bank loans (but not the cost of public bonds) beyond its impact through ratings. This supports the argument that banks have superior abilities in pricing soft information, such as corporate culture. Finally, the impact of religiosity is stronger when the lender is a small bank.


Corresponding author

*Jiang,, University at Buffalo (SUNY); Kose,, New York University, Temple University; Li,, University of Iowa; and Qian,, University of Iowa.


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We thank Iftekhar Hasan, Gilles Hilary (the referee), Paul Malatesta (the editor), Yihui Pan, Fei Xie, and Yiqing Xu for helpful suggestions and comments. We also thank Michael Roberts for sharing the DealScan–Compustat link file with us. All errors are our own.



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