Societal Trust and Financial Market Participation: Evidence from the Freedman's Savings Bank

113 Pages Posted: 20 Apr 2018 Last revised: 10 Jan 2022

See all articles by Virginia Traweek

Virginia Traweek

Texas Christian University

Malcolm Wardlaw

University of Georgia

Date Written: December 14, 2021

Abstract

Using a novel dataset from the Freedman's Savings Bank, we examine how societal trust impacts policy makers' goals of increased financial participation and economic integration. We find that events that impact trust in political representation and public safety also impact financial participation. Factors which provide stability to minority communities also influence the reactions to financial panics, increasing the likelihood of having wealth destroyed in a failure and creating a welfare transfer to better informed non-minorities. Our results demonstrate how the inherent fragility of financial institutions can cause disproportionate damage to minority communities.

Keywords: banking, bank runs, financial participation, development economics, African American economic history, access to finance

JEL Classification: G21, N11

Suggested Citation

Traweek, Virginia and Wardlaw, Malcolm, Societal Trust and Financial Market Participation: Evidence from the Freedman's Savings Bank (December 14, 2021). Available at SSRN: https://ssrn.com/abstract=3164418 or http://dx.doi.org/10.2139/ssrn.3164418

Virginia Traweek

Texas Christian University ( email )

Fort Worth, TX 76129
United States

Malcolm Wardlaw (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

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