The impact of religiosity on corporate debt structure

This study examines the impact of religious beliefs on corporate debt structure using a regression model applied to a dataset comprising 485 firms across 10 countries over the period 2009–2022. The results indicate that, while firms operating in countries with higher levels of religiosity tend to rely more on long-term debt, religious beliefs do not have a significant effect on firms’ short-term debt decisions. In addition, we show that the positive effect of religiosity on long-term debt is less pronounced for firms with higher ratio of institutional ownership and more pronounced in countries with better control for the corruption. Our main findings remain robust when alternative measures of the dependent variable and alternative model specifications are employed. This study contributes to the literature on the relationship between religiosity and corporate debt structure, while also providing practical implications for other stakeholders.