Religion and Venture Investing : A Cross-Country Analysis

Using a sample of 56 countries over the 2000-2016 period, we document lower levels of venture capital investments in more religious countries. These results are not specific to any primary religion. Furthermore, we show that the negative relation between religiosity and venture investing mainly stems from risk aversion inherent in religiosity. Our results are unlikely driven by economic clout, as we show more religious countries in fact have higher levels of domestic credit or non-financial investments, despite lower levels of venture investments. We also present several findings consistent with risk aversion. Venture investments in more religious countries are more likely to have successful exits and are less likely to be foreign or early-stage deals. Our results are robust to different measures of venture investments and religiosity, and to alternative specifications that account for endogeneity