Opening a new bank branch in a Muslim neighborhood in India has almost zero impact on the number of people who take out loans.

Religious identity and cultural norms cause many individuals to self-select out of conventional banking regardless of whether the bank is nearby. Most policy makers assume that financial exclusion is caused by a lack of physical access or systemic discrimination. These results show that even when banks are perfectly available and non-discriminatory, deep-seated beliefs create a persistent credit gap. You cannot solve this problem simply by building more branches or changing laws. True inclusion requires addressing the specific religious frameworks that govern how people view debt and interest.