Religion and Equity Home Bias

Abstract

This study aims to examine whether religion influences equity home bias. Large volumes of international portfolio investment and religious characteristics data are obtained from 2001 to 2019. A panel OLS model is used to investigate the relationship between religion and equity home bias. We find that both religiosity and religious hierarchy in a country positively correlate with the level of home bias. In contrast, religious diversity negatively affects the degree of home bias. Overall, our study highlights the role of religion in explaining equity home bias.