IFin Seminar, Maxime Bonelli, London School of Business - Divine Catalysts: Religion and Portfolio Choices

Speaker:  Maxime Bonelli, London School of Business

Title:        Divine Catalysts: Religion and Portfolio Choices

Date:       12.03.2025

Time:       12:25 - 13:40

Room:       Blue Room

Abstract

This paper examines how religion influences equity investment and portfolio diversification. We exploit trading sessions held during a major religious festival that emphasizes new beginnings and long-term prosperity to examine how religiously-framed cues affect individual investor behavior. Individuals whose religion is associated with the festival invest substantially more during these sessions and buy new stocks. Purchases are concentrated in stocks of large, mature, and low-volatility firms, and do not exhibit lottery-like characteristics. Consistent with the emphasis on long-term prosperity, these investments are held longer than other portfolio positions and result in persistent increases in portfolio size. These purchases mechanically increase portfolio diversification and do not reduce risk-adjusted returns. Our findings highlight that religion can nudge individuals towards long-term investments and have implications for wealth accumulation.