‘And forgive us our debts’: Christian moralities and over-indebtedness

Abstract

Abstract This paper analyzes whether Christian moralities and rules formed differently by Catholics and Protestants impact the likelihood of households becoming over-indebted. We find that over-indebtedness is lower in regions in which Catholics outweigh Protestants, indicating that Catholics' forgiveness culture and stricter enforcement of rules by Protestants serve as explanations for our results. Our results provide evidence that religion affects the financial situations of individuals and show that even 500 years after the split between Catholics and Protestants, the differences in the mindsets of both denominations play an important role in situations of severe financial conditions.