Trust in Financial Institutions: A Survey

43 Pages Posted: 20 Aug 2020

See all articles by Carin van der Cruijsen

Carin van der Cruijsen

De Nederlandsche Bank

Jakob de Haan

University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)

Ria Roerink

De Nederlandsche Bank

Date Written: August 18, 2020

Abstract

Trust in financial institutions is widely considered important. However, a clear overview of studies on the drivers of trust is missing. We intend to fill this gap in the literature. After discussing why trust in financial institutions is important, we turn to its measurement, where we distinguish between trust in one’s own institution and trust in institutions in general (narrow-scope and broad-scope trust), and discuss how these measures differ from generalized trust (i.e. trust in other people with whom there is no direct relationship). Finally, we survey the determinants of trust in financial institutions and discuss a wide range of drivers. First, trust in financial institutions depends on the economic situation: it behaves procyclically and is negatively affected by financial crises. Second, the behavior of the financial institutions matters: prudent conduct, the provision of good services and financial health have a positive effect on trust. Third, although consumer characteristics also relate to trust, many of these relationships are context-dependent. Fourth, there is a positive association between narrow-scope trust on the one hand and broad-scope trust and generalized trust on the other. Last, policy measures and supervisory actions can help prevent loss of trust.

Keywords: trust in financial institutions, drivers of trust in financial institutions, survey

JEL Classification: D12, D83, E58, G21, G22

Suggested Citation

van der Cruijsen, Carin and de Haan, Jakob and de Haan, Jakob and Roerink, Ria, Trust in Financial Institutions: A Survey (August 18, 2020). De Nederlandsche Bank Working Paper No. 693, Available at SSRN: https://ssrn.com/abstract=3677835 or http://dx.doi.org/10.2139/ssrn.3677835

Carin van der Cruijsen (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

HOME PAGE: http://www.dnb.nl/en/onderzoek-2/onderzoekers/overzicht-persoonlijke-paginas/index.jsp

Jakob De Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Ria Roerink

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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