Financial Impact of Trust and Institutional Quality around the World

Svatopluk Kapounek, Evžen Kočenda and Luděk Kouba

No 2022/28, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: We investigate the financial impact of social trust, institutional quality, and regulations. As a testing ground we employ a unique, large, and hand-crafted dataset of more than 850 000 lending-based crowdfunding projects from 155 platforms across 55 countries during 2005-2018. We show that the impact of social trust is positive but economically less pronounced than that of institutional trust proxied by legal and property rights protection and regulation. Moreover, the financial impact of social trust is greater at the national level, while impact of institutional quality dominates at the international level. Nevertheless, the financial impact of trust and institutional quality around the world is positive, which is an encouraging implication under increasing anonymity and internationalization of financial environment.

Keywords: social capital; social trust; institutional trust; uncertainty; crowdfunding; financial markets (search for similar items in EconPapers)
JEL-codes: A13 D23 G41 K11 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2022-12, Revised 2022-12
New Economics Papers: this item is included in nep-cfn, nep-pay and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2022_28

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