Beyond religion and culture: The economic consequences of the institutionalization of sharia law |
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| Affiliation: | 1. School of Economic Sciences, Washington State University, Pullman, WA 99164, United States of America;2. Women, Business and the Law, Development Economics, The World Bank Group, Washington, DC 20433, United States of America;3. Office of the Chief Economist, Middle East and North Africa Region, The World Bank Group, Washington, DC 20433, United States of America;1. School of Management, Xi''an Jiaotong University, Xi''an, China;2. Department of Economics, Cornell University, New York, United States;1. School of Economics and Business Administration, Chongqing University, China;2. Business School, Soochow University, China;1. School of Economics, Finance and Marketing, RMIT University, Melbourne, Australia;2. CITIC Securities Co., Ltd, China;1. Chulalongkorn Business School, Chulalongkorn University, Phayathai Road, Pathumwan, Bangkok 10330, Thailand;2. University of California San Diego and Puey Ungphakorn Institute for Economic Research (PIER), Bank of Thailand, Thailand |
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| Abstract: | Religious and cultural practices have major implications for a Country's economic performance. However, it is not clear if the formal institutionalization of these social norms within a country's legal system causes material economic effects. In this study I show this to be the case. By employing the synthetic control methodology to mitigate endogeneity concerns, I show that the institutionalization of Sharia Law within a Muslim-majority country's legal system causes material economic costs. Results hold in different settings, confirming that the governmental enforcement of existing social norms constrain individuals' social and economic freedom, ultimately resulting in worsened economic outcomes. |
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