Faith-based mutual funds have recently become a growing corner of the mutual fund industry. Morality and ethics are thought to exert an influence on investors' decisions in this segment, though their role in driving such investments is not clear as these funds are also attractive due to their distinct risk-return profile. If non-pecuniary motives are predominant, investors in such funds may be less sensitive to financial performance, resulting in different fund flows patterns relative to conventional funds. This paper fills the gap in the literature, by providing an express linkage between religious preferences and investment in an Islamic fund. Using an incentivized lab experiment, we compare the extent to which investors with religious preferences are likely to accept inferior financial performances to pursue investments aligned with their religious preferences. We show that those with stronger religious preferences are more likely to stick with their investment in Islamic funds when these funds underperform. We do not find that social preferences play a similar role in socially responsible funds, and we find that investors prefer religious investments over socially responsible investments, providing strong evidence that religious investors do not view socially responsible funds as substitutes for Islamic funds.

中文翻译：

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宗教的力量：伊斯兰在实验室中的投资


基于信仰的共同基金最近已成为共同基金行业的一个日益增长的角落。道德和伦理被认为会影响投资者在这一领域的决策，尽管它们在推动此类投资中的作用尚不清楚，因为这些基金因其独特的风险回报状况而具有吸引力。如果非金钱动机占主导地位，此类基金的投资者对财务表现可能不太敏感，从而导致相对于传统基金的资金流动模式不同。本文通过提供宗教偏好与伊斯兰基金投资之间的明确联系，填补了文献中的空白。使用激励性实验室实验，我们比较了具有宗教偏好的投资者在多大程度上可能接受较差的财务表现来追求符合其宗教偏好的投资。我们表明，当伊斯兰基金表现不佳时，那些宗教偏好更强的人更有可能坚持对伊斯兰基金的投资。我们没有发现社会偏好在社会责任基金中发挥类似的作用，我们发现投资者更喜欢宗教投资而不是社会责任投资，这提供了强有力的证据，表明宗教投资者不将社会责任基金视为伊斯兰基金的替代品。