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The impact of religiosity on corporate loans and maturity structure: evidence from China

Fansheng Jia (Finance and Investment Department, Business School, Sun Yat-Sen University, Guangzhou, China)
Yilin Zhang (Southwestern University of Finance and Economics, Chengdu, China)
Kam C. Chan (Western Kentucky University, Bowling Green, Kentucky)
Sujuan Xie (Center for Accounting, Finance and Institutions, Business School, Sun Yat-Sen University, Guangzhou, China)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 7 August 2017

Abstract

Purpose

This paper aims to examine the relation between religiosity and formal financing in the context of long- and short-term corporate loans.

Design/methodology/approach

This paper uses archival methodology to conduct a multiple regression analysis with the amount of long- and short-term corporate loans as the dependent variable and a measure of religiosity as the key explanatory variable.

Findings

This paper offers four findings. First, when a private firm locates in a high religiosity region, it is more likely to get more corporate loans and the amount of corporate loans is positively correlated with the extent of religiosity. Second, religiosity drives a private firm getting more (less) short-term (long-term) loans. Third, a private firm in a high religiosity region is able to incur lower interest cost associated with more short-term loans. Finally, the results are confined to Buddhism, Taoism and Christianity.

Practical implications

Overall, the findings are consistent with the notion that religiosity shapes the local culture so that individuals, some of them are borrowers and lenders, show the religious traits in the formal lending and borrowing relationship.

Originality/value

Overall, findings of this paper are consistent with the notion that religiosity shapes the local culture so that individuals, some of them being borrowers and lenders, show religious traits in the formal lending and borrowing relationship.

Keywords

Acknowledgements

Jia acknowledges the support from the China Ministry of Education of Humanities and Social Science Foundation (Project No. 17YJC790058) and Xie acknowledge the support from the Sun Yat-Sen Business School (the Fundamental Research Funds for the Central Universities 17wkpy21). Zhang acknowledges the support from the China Postdoctoral Science Foundation (Project No. 2016M590896) and the China Ministry of Education of Humanities and Social Science Foundation (Project No. 16YJC790141). The authors acknowledge the helpful comments from an anonymous reviewer. All opinions and any errors are the authors’.

Citation

Jia, F., Zhang, Y., Chan, K.C. and Xie, S. (2017), "The impact of religiosity on corporate loans and maturity structure: evidence from China", Pacific Accounting Review, Vol. 29 No. 3, pp. 307-329. https://doi.org/10.1108/PAR-02-2017-0012

Publisher

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Emerald Publishing Limited

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