HKS Authors

See citation below for complete author information.

Alan L. Gleitsman Professor of Social Innovation, HKS; Joseph C. Wilson Professor of Business Administration, HBS


Financial institutions with religious affiliations are active participants in the financial market, engaging in various risky financial behaviors, yet existing studies of religion and risk preferences yield inconsistent findings. Informed by institutional theory, we argue that moral imperatives are foundational for religious organizations’ identity; as such, the nature of the risky financial behaviors in which religious financial institutions engage matters. By examining religious credit unions’ engagement in the risky financial product– private- label mortgage-backed security (PMBS), we argue that religious credit unions shun financial products associated with deception, greed, and excessive value extractions that clash with the core moral principles of probity, justice, and trust that are fundamental to religious identity. Furthermore, we propose that as market participants, religious credit unions are subject to institutional demands from religion as well as the capitalist market. We identify two local community- level characteristics that moderate the relationship of religious organizational identity and engagement in PMBS: the density of religious organizations that enhances this relationship, and the prevalence of for-profit financial institutions that attenuates this relationship. We test and find empirical support for our theory using American credit union- and community-level data during the years 2010 to 2014. We conclude by discussing contributions to research on organizational identity, institutional theory, hybrid organizations, and financial institutions.


Zhou, Yanhua, Julie Battilana, Thibault Daudigeos, and Brian Smith-Vandergriff. "Swinging between Moral and Market Imperatives." Academy of Management Proceedings 2017.1 (January 2017).