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

104 Pages Posted: 20 Apr 2018 Last revised: 13 May 2021

See all articles by Virginia Traweek

Virginia Traweek

University of Michigan, Department of Finance

Malcolm Wardlaw

University of Georgia

Date Written: May 11, 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. The same factors that make communities resilient to racial violence also influence the reactions to financial panics, which increases the likelihood of having wealth destroyed in a collapse, particularly as compared to white depositors. Our results demonstrate how the inherent fragility of financial institutions can cause disproportionate damage to the stability of disenfranchised 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 (May 11, 2021). 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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