Social trust and institutional (bank) trust: Empirical evidence of interaction

Abstract

This paper analyzes the interaction between interpersonal trust (as informal rules and behavior) and trust in banks (as formal rules and institutions) as well as institutional sources of trust. Structural equation modeling and cluster analysis were applied to data from the World Values Survey extracted from the Wave 6 (2010-2014). The results of cross-sectional estimations show complementary view on interaction-a positive link between interpersonal trust and trust in banks. Using cluster method, strong impact of institutional environment (GDP per capita, Education Index, Inequality Index, Rule of Law Index) on the level of interaction has been found. The lowest level of linkages between interpersonal trust and trust in banks is associated with the worst institutional environment, the highest level of impact-with the best institutional environment.

Institutional development gap in the social sector: Cross-country analysis

“…In this problem, the role of institutions in the development of the financial and investment markets of transition economies, studied by Djalilov et al, (2015), Dovhan et al, (2017), Poliakh et al, (2017), Leonov et al, (2012), Kostyuchenko et al, (2018), , Valaskova et al, (2018), Vasilyeva et al, (2013), Bilan et al, (2019b), Vasilyevaet al, (2014, arouses great interest. James E. Austin et al (2007), Gowdy et al, (2009), Buriak et al, (2019), Brychko and Semenog, (2018), Bilan et al, (2019c), Kliestik et al, (2018) supposed that the convergence of social development parameters is relevant today for two reasons: 1) The growing importance of social issues and the necessity to bring countries closer to social standards; 2) Blurring the boundaries between the commercial and social sectors. Ravallion (2012), who analyzed and confirmed slow convergence in income distribution, but does not prove poverty convergence, is among researchers of social parameter convergence.…”

Trust crisis in the financial sector and macroeconomic stability: a structural equation modelling approach

“…The same approach for measuring trust in organisations in general (Ol ah et al, 2017(Ol ah et al, , 2019, and trust in management, trust in co-workers, trust in technologies for knowledge management (Dvorsk y et al, 2020; Smaliukien_ e et al, 2017; Virglerov a, 2018) in particular, was used. Much of the previous research on the role of institutional (bank) trust (Buriak et al, 2019;Roth, 2009;Roth et al, 2012) in general, trust in banking business (Ahmed et al, 2017), customers' trust in traditional banking (Skvarciany & Jurevi cien_ e, 2017), trust on electronic banking (Bel as et al, 2015; Veja cka & Stofa, 2017) in particular, was used either a set of formalised questions or existed indexes formed based on different questionnaires. Accordingly, a sharp decline in the confidence/sentiment indexes is seen as a trust crisis/collapse of trust/distrust.…”

Trust in Financial Institutions: A Survey

“…Various studies find that trust in financial institutions also depends on policy measures and institutional settings. For example, Buriak et al (2019) show that the relationship between trust in banks and generalized trust is strongest in a well-established institutional environment. Osili and Paulson (2014) find that deposit insurance can mitigate the effect of banking crises on trust,…”

“…The latter matters the most. Buriak et al (2019) 60 countries Banks Broad-scope trust There is a positive relationship between generalized trust and trust in banks. The link is strongest if the institutional environment is good.…”