Séminaire du groupe de recherche Finance : Anastasiya SHAMSHUR et Paul-Olivier KLEIN

Anastasiya SHAMSHUR (University of Kent and CERGE-EI)
Laurent WEILL (EM Strasbourg Business School, University of Strasbourg)

Bank Risk and Firm Investment: Evidence from Firm-Level Data
 
Is higher bank risk-taking associated with more firm investment? Combining firm-level data with bank-level data, we examine the relation between bank risk and firm investment in a large sample of firms from nine European countries. We find that bank risk is positively associated with firm investment. Our finding accords with the modern theory of financial intermediation: risk taking by banks enhances firm investment as banks become more willing to perform their key function in the economy. Additionally, we find that this positive relation is present for firms of all sizes and is stronger when banks are more efficient.

 

Shee-Yee KHOO (University of Aberdeen Business School)
Paul-Olivier KLEIN (Université Jean Moulin Lyon 3, iaelyon, Magellan)

The Price of Religion: Evidence from Islamic Bonds Prospectuses   

Do religious beliefs impact asset prices? The difficulty of finding a proper proxy for religion and linking it to economic outcomes has led to limited answers to this question. We offer a new way to measure the economic impacts of religion. Employing the specific field of Islamic finance, we identify the role of religion with the use of religious words in Islamic bonds prospectuses. We link the occurrences of words like sharia, Islam, fiqh, and Allah, to the yield-at-issuance of Islamic bonds. We control for a large array of confounding drivers, including documents wording, financial characteristics of the issuance and year, country, and industry fixed effects. The use of religious words systematically reduces the yield paid by issuers. The effect is sizeable. For instance, mentioning the word Allah reduces the yield-at-issuance by more than ½ a percent point; mentioning fiqh (Islamic law) reduces the yield by more than 1 percent point. Forgetting to mention the word sharia increases the yield by almost 1 percent point. Multiplying the reference to religious principles further reduces the yield. Several additional tests confirm the robustness of our findings. Notably, issuing a fatwa alongside an Islamic bond issuance also substantially reduces the yield. Overall, our findings directly identify and measure the effect of religious beliefs on the price of economic assets.