Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5088968 | Journal of Banking & Finance | 2014 | 54 Pages |
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
Authors
Lieven Baele, Moazzam Farooq, Steven Ongena,