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Trust in the central bank, financial literacy, and personal beliefs

Mihai Niţoi and Maria-Miruna Pochea

Journal of International Money and Finance, 2024, vol. 143, issue C

Abstract: This paper examines trust in the central bank across ten Central, Eastern and Southeastern European countries, using survey data collected from 61,398 individuals. Our results show that financially literate individuals are more likely to trust central banks. The association is stronger in countries with inflation targeting and flexible exchange rates regimes. Distrust in the central bank is associated with higher inflation expectations, savings in foreign currency or a preference for cash. Even when the sample is restricted to individuals with high inflation expectations, financial literacy remains associated with greater trust in the central bank. We find that trust in the central bank correlates negatively with financial inclusion but positively with wealth. Financially literate citizens express less trust in the government, which highlights that trust in the central bank is not entirely indicative of trust in the government. However, individuals who think that prices will rise and the local currency will depreciate distrust both the central bank and the government.

Keywords: Trust; Central bank; Government; Financial literacy; Beliefs; OeNB Euro Survey (search for similar items in EconPapers)
JEL-codes: D14 E52 E58 G53 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:143:y:2024:i:c:s0261560624000536

DOI: 10.1016/j.jimonfin.2024.103066

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