Islamic Resurgence and Social Violence During the Indonesian Financial CrisisUniversity of Chicago mimeo

Whether social violence rises or falls with religious intensity is a subject of much debate. This paper exploits di¤erences in religious intensity across Indonesia before and during the Indonesian nancial crisis and relative price shocks induced by the crisis to identify the e¤ect of economic distress on the relationship between religious intensity and social violence. Religious intensity before the crisis and social violence after the crisis are strongly associated. Stronger measures of religious intensity are more strongly associated with social violence. Social violence is negatively associated with other social activities. These results are unlikely to be driven by omitted environmental variables: social violence increases fastest where participation in Koran study also increases the fastest, and this is not true for state or industrial violence. Religious intensity is more strongly linked with social violence in regions that are more economically distressed. In other words, economic distress appears to have a causal impact on the link between religious intensity and social violence. Credit availability mitigates this e¤ect. I explain these \u85ndings in a model where high marginal utilities during economic distress increase incentives for group conict where group conict increases the budget of insurance groups. With volatility, religion