2023 Fiscal Year Research-status Report
Loan structure or religious framing: What drives the exceptional performance of personal loans by Islamic banks?
| Project/Area Number |
23K12500
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| Research Institution | Hitotsubashi University |
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Principal Investigator |
Umer Hamza 一橋大学, 社会科学高等研究院, 特任講師 (00972746)
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| Project Period (FY) |
2023-04-01 – 2025-03-31
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| Keywords | religious nudging / Islamic loan / profit and loss sharing / loan repayment / Islam / Islamic banking / Quran |
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| Outline of Annual Research Achievements |
As per plan, lab experiments were conducted in Pakistan (3rd to 6th October, 2023) with 200 students (198 usable observations) to examine the influence of religion on the Islamic loan's repayment rate. The main finding is that religious nudging (done via a brief Quranic passage) significantly increases loan repayment rate (94% repayment rate) as compared to the baseline scenario (69% repayment rate), Islamic frame without Quranic passage (58% repayment rate) and conventional frame (70% repayment rate). The findings highlight the effectiveness of using religious nudging (non-monetary intervention) to enhance loan's repayment rate in Pakistan. The initial draft of the paper is completed, and abstract is submitted to a behavioral economics conference scheduled in Scotland in August this year.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
The data collection went very smoothly. The data analysis and paper writing activities are completed as per the initial plan.
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| Strategy for Future Research Activity |
The abstract of the paper is submitted to the SABE conference (Society for the Advancement of Behavioral Economics) scheduled to take place in Scotland in August this year. I will travel to Scotland to present the paper, obtain feedback, and incorporate it in the paper. Afterwards, it will be submitted to The Review of Economic Studies.
Using data from post experiment surveys, I will finish one more paper that will study ordering effects under random payment. The purpose of this paper is to reveal whether ordering effects in decisions persist when randomly one of the multiple decisions is selected for payment. The findings will offer important insights that will be useful for designing future lab experiments.
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