Financial, business and trust cycles: the issues of synchronization

Yuriy Bilan (), Maryna Brychko, Anna Buriak () and Tetyana Vasilyeva ()
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Yuriy Bilan: Faculty of Management, Rzeszow University of Technology, al. Powstañców Warszawy 12, 35-959, Rzeszów, Poland
Anna Buriak: Sumy State University, Rymskogo-Korsakova st., 2, 40007 Sumy, Ukraine
Tetyana Vasilyeva: Sumy State University, Rymskogo-Korsakova st., 2, 40007 Sumy, Ukraine

Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, 2019, vol. 37, issue 1, 113-138

Abstract: Starting from 1920, the growing body of research has been focused on the role of psychological factors in cycle theories. Mainstream macroeconomic models are insufficient for exploring interaction among economic agents, financial institutions, and the real sector of economy. This paper is among the first to show the synchronization of financial and business cycles through the trust cycle but with a certain delay in terms. The paper presents the conceptualization of trust as a combination of two pillars – structure-based confidence based on objective information about system competences, regulations, and norms, and sentiment-driven actions of economic agents (feelings, emotions, and other subjective characteristics). The paper offers a theoretical descriptive model of a trust cycle that allows exploring several stages of correlation between financial fluctuations, trust changes, and large swings in business cycle.

Keywords: trust cycle; business cycle; financial cycle; economic agents’ behavior (search for similar items in EconPapers)
JEL-codes: E32 E71 G41 O16 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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