Societal trust and banks’ funding structure

Justin Y. Jin, Kiridaran Kanagaretnam and Wenting Wang

Journal of Behavioral and Experimental Finance, 2020, vol. 27, issue C

Abstract: Based on a large sample of U.S. public and private banks from 2000 to 2017, this paper investigates the implications of the county-level societal trust for banks’ funding structure. By using social capital as the proxy for societal trust, we find a significantly positive relationship between societal trust and the core deposits. This finding supports the argument that banks have greater access to retail deposits when they are located in regions with higher levels of societal trust. In an additional analysis, we find that the significant effects of societal trust hold only for smaller private banks.

Keywords: Bank; Funding structure; Core deposits; Retail deposits; Trust; Social capital (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:27:y:2020:i:c:s2214635020300125

DOI: 10.1016/j.jbef.2020.100357

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