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Financial stability and public confidence in banks

Lucy Chernykh, Denis Davydov and Jukka Sihvonen

No 2/2019, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: We use a novel, household opinions-based measure – Public Confidence in a Bank – to explore the role of bank-level and system-wide determinants of customers’ trust in banks. Our study covers a panel of approximately 260 large Russian commercial banks publicly monitored during 2010–2017. We find that public confidence in a bank is highly sensitive to the industry-level financial stability indicators, but less sensitive to bank-level risk characteristics. This result reveals an important role of overall banking sector stability in determining public perception of the safety and soundness of individual banks.

JEL-codes: G21 D14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cis and nep-tra
Date: 2019-02-19
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Persistent link: https://EconPapers.repec.org/RePEc:bof:bofitp:2019_002

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