Does religion influence the household finance? Evidence from Europe

Abstract

Purpose This paper aims to examine the influence of religious backgrounds and religiosity on three dimensions of household finance (the decision to hold secured debt, the likelihood of being in a state of financial distress and the likelihood of being in a state of financial well-being) across a large sample of European countries. Design/methodology/approach The study uses data from the European Union Statistics on Income and Living Conditions (EU-SILC) data set, spanning from 2004 to 2018. The authors conduct regression analysis to examine the relationship between religion and household financial choices. Findings The study finds that belonging to a predominantly Catholic or Orthodox (Protestant) country is negatively (positively) associated with the likelihood of holding a mortgage. Belonging to a mostly Catholic (Protestant) country is negatively (positively) associated with the likelihood of being in a state of financial distress. Belonging to a predominantly Catholic (Protestant) country is positively (negatively) associated with the likelihood of being in a state of financial well-being. These relationships remain robust after controlling for a large number of demographic and economic variables. Originality/value In this paper, the authors analyze for the first time the impact of religion on household finance in a wide range of European countries. It is also the first time that the EU-SILC database, which aggregates data on more than three million European households, is used for the study of this topic.