Financial Stability and Public Confidence in Banks
34 Pages Posted: 25 Feb 2019
Date Written: February 19, 2019
We use a novel, household opinions-based measure – Public Confidence in a Bank – to explore the role of bank-level and system-wide determinants of customers’ trust in banks. Our study covers a panel of approximately 260 large Russian commercial banks publicly monitored during 2010–2017. We find that public confidence in a bank is highly sensitive to the industry-level financial stability indicators, but less sensitive to bank-level risk characteristics. This result reveals an important role of overall banking sector stability in determining public perception of the safety and soundness of individual banks.
Keywords: financial stability, public confidence, bank failures, customer opinions, online reviews
JEL Classification: G21, D14
Suggested Citation: Suggested Citation