Article ID Journal Published Year Pages File Type
5088968 Journal of Banking & Finance 2014 54 Pages PDF
Abstract
We compare 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 default rate of Islamic loans is less than half the default rate of conventional loans. Islamic loans are less likely to default during Ramadan and in big cities if the share of votes to religious-political parties increases, suggesting that religion - either through individual piousness or network effects - may play a role in determining loan default.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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