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

102 Pages Posted: 20 Apr 2018 Last revised: 30 Sep 2020

See all articles by Virginia Traweek

Virginia Traweek

University of Michigan, Department of Finance

Malcolm Wardlaw

University of Georgia

Date Written: September 29, 2020

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. We further find that black depositors are significantly less likely to escape the bank's collapse and that depositors with stronger community ties are more likely to have wealth destroyed by the collapse. Our results demonstrate how the inherent fragility of financial institutions can disproportionately impact wealth accumulation in disenfranchised populations.

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 (September 29, 2020). Available at SSRN: https://ssrn.com/abstract=3164418 or http://dx.doi.org/10.2139/ssrn.3164418

Virginia Traweek

University of Michigan, Department of Finance ( email )

Ann Arbor, MI
United States

Malcolm Wardlaw (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

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