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Trust in financial institutions: A survey

Carin Cruijsen, Jakob de Haan () and Ria Roerink

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: Trust in financial institutions is widely considered important. However, a clear overview of studies on the drivers of trust is missing. We intend to fill this gap in the literature. After discussing why trust in financial institutions is important, we turn to its measurement, where we distinguish between trust in one's own institution and trust in institutions in general (narrow-scope and broad-scope trust), and discuss how these measures differ from generalized trust (i.e. trust in other people with whom there is no direct relationship). Finally, we survey the determinants of trust in financial institutions and discuss a wide range of drivers. First, trust in financial institutions depends on the economic situation: it behaves procyclically and is negatively affected by financial crises. Second, the behavior of the financial institutions matters: prudent conduct, the provision of good services and financial health have a positive effect on trust. Third, although consumer characteristics also relate to trust, many of these relationships are context-dependent. Fourth, there is a positive association between narrow-scope trust on the one hand and broad-scope trust and generalized trust on the other. Last, policy measures and supervisory actions can help prevent loss of trust.

Keywords: trust in financial institutions; drivers of trust in financial institutions; survey (search for similar items in EconPapers)
JEL-codes: D12 D83 E58 G21 G22 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-mac and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:693

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