Abstract
Literature on the effect of religion and religiosity on corruption has failed to distinguish between direct and mediated effect and to determine the different roles of two alternative mediation channels-the personal versus the cultural channel. Using a data set of 102 countries, we found that hierarchical religions have significant positive associations with corruption levels, while the non-hierarchical Protestant Christianity has significant negative associations with corruption levels. Most of the effect is mediated by the cultural channel. However, some hierarchical religions (particularly Sunni Islam and Orthodox Christianity) have both an indirect mediated effect and a direct unmediated effect, suggesting an additional dissociative parameter besides the hierarchical/non-hierarchical parameter, which we suggest is the status of a formal/informal state religion. The findings are closely linked to the modern view of economic development that although institutions give rise to economic growth, it is culture that shapes institutions.