Do local differences in trust affect bank lending activities?

Krzysztof Jackowicz, Łukasz Kozłowski and Paweł Wnuczak

Finance Research Letters, 2024, vol. 61, issue C

Abstract: This study investigates the impact of local differences in trust on bank lending activities. Using a novel dataset of nearly 600 local Polish banks and their socioeconomic environments, we find that banks operating in regions with high-trust scores set lower loan interest rates and have lower labor-related costs compared to those operating in low-trust regions. Therefore, the empirical evidence suggests that local differences in trust influence not only bank-borrower relationships but also the human resources needed to gather and process credit information.

Keywords: Trust; Bank relationships; Lending; Bank costs; Loan costs (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000345

DOI: 10.1016/j.frl.2024.105004

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