In Theory: A company’s location could affect its ability to get a loan

A study of American corporate culture finds the ability to receive loans can be influenced by the religiosity of a company’s location, Forbes reports.

“Firms in higher-religiosity counties have higher credit ratings and lower debt costs,” the study claims, further suggesting that lenders take into account the religiosity of a firm’s location when weighing a propensity to take risks and willingness to repay loans.

The Journal of Financial and Quantitative Analysis study inspired reporter Kenneth Kim’s own research, which he believes indicates a cross-cultural phenomenon at work. After crunching the data of Chinese firms, he concluded that companies with religious founders in that country also enjoy more public trust.

Q. Would you place more faith in a company because of its theistic stance or the religiosity of its location? Do you believe the tendency indicated in the study is warranted?

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It makes sense that corporate willingness to repay loans would be higher in more religious counties or from companies with religious founders. The world’s major religions are big on teaching ethics to their members, and expecting ethical behavior from them. People practice their religions willingly, usually, so they’re more likely to internalize their religion’s moral standards. Still, I’d look more at the particulars of the company than the religiosity of its location when choosing which company I’d trust most. Good behavior is, well, good, and it may very well help you get a loan. But before God, who is absolutely holy, none of us has the collateral we need. We all fall short of his necessarily perfect standard. But God still wants to “do business” with us. That’s why he sent his son Jesus to live a perfect life for us, so that through simply believing in what Jesus did for us on the cross God might reconcile us to himself. We must prove ourselves to financial institutions to get a loan. God proved his love for us to give us the gift of eternal life.

Pastor Jon Barta

Burbank

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A great thing about church — more or less — is that it wears its ideals on its sleeve. Since we know that a person who makes a promise is more likely to keep it if he says it out loud, then it follows that an organization that positions itself as a beacon of morality and ethics wouldn’t welch on a loan. And the exceptions prove the rule.

When we hear of isolated or systemic abuses in churches, malfeasance or other skulduggery, the majority of us register the news as irony. “You’d think that wouldn’t happen because the Bible/Koran/Torah/Dungeons and Dragons manual specifically prohibits X, Y, and/or Z,” we say. So when a megachurcher like Joel Osteen only grudgingly opens his doors to a Hurricane Harvey victim, for example, this un-Christian behavior is shocking. We expect better of our churches, which is why the study that finds banks look favorably on loan applicants from both high-religiosity counties as well as churches themselves makes sense.

While we seem to be approaching a zero-shame society, I still have confidence that most religious folk would be mortified to be in arrears on a debt. They are loath to be known as Bad Faith Borrowers.

Marty Barrett

Vice President

Unitarian Universalist Community of the Verdugo Hills (UUVerdugo)

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Yes, I do try my best to make sure that my consumer spending does not help advance ideas and actions which I don’t support, to the extent that is possible in our complex and opaque corporate reality.

But this study, apparently submitted but not yet published in a peer-reviewed academic journal, does not actually reveal anything about the beliefs and performance of individual companies. It studies the “cost of debt” of all the companies within locations (counties) that are rated overall to be more religious than the norm for the rest of the United States, as per the American Religion Data Archives.

The authors state very clearly what they are assessing: “Local religiosity of the area where the firm is located represents an important aspect of a firm’s culture because it captures the prevailing religious attitude, moral standard and risk preferences in or around the firm.”

To me it is quite a logical leap to rate individual firms’ morality based on the religious tendencies in the geographic area in which they are located. I’m willing to accept that anecdotal reports link greater public trust to firms with religious founders. I am not seeing any proof of a broader tendency, that firms in more religious areas do better financially than those in less religious areas.

Roberta Medford

Atheist

Montrose