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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper empirically investigates the relationship between individual trust in financial institutions and individual access to these institutions. Based on a large-scale survey of savings patterns of Indians, we find that individuals reporting that they do not have access to certain financial institutions within a commutable distance of one day are less likely to trust these institutions with their money. Terms of use: Documents in EconStor mayMoreover, we find that this relationship holds for different banks and financial institutions offering services in low-income areas and that differences in trust can be explained to some extent by differences in individual access.JEL-Codes: D1, G11, G21, R2

Prior research suggests that trust plays an important role in an individual's decision to participate in financial markets. This paper focuses on potential customers in retail banking markets and empirically investigates their trust in foreign banks and domestic banks. We argue that differences in customer trust can be related to three factors, namely bank-specific characteristics, individual characteristics of the potential customer and characteristics of the institutional environment. Using a large survey on the savings patterns of Indian households, we find that potential retail banking customers in India are less likely to trust foreign banks with their money than private Indian banks. However, our results also suggest that highly educated Indians using information sources such as the Internet, radio or newspaper, tend to have more confidence in foreign banks than in private Indian banks. Moreover, in regions with either more foreign bank branches or higher corruption levels the likelihood of consumers trusting Indian private banks more than foreign banks is lower than in other regions.

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