Trusting banks in China

Abstract

Trust in banks is essential to financial system effectiveness. The present study examines the determinants of trust in banks in China. Using the most recent wave of the World Values Survey, which included information on trust in banks from the survey in China in 2012, we perform ordered logit estimations to investigate the potential influence of a large set of individual and provincial indicators on trust in banks. We observe the influence of certain sociodemographic indicators. Membership in the Communist Party and living in a rural area are negatively associated with trust in banks. Age and satisfaction with financial situation contribute to higher trust in banks, while being married and having a higher level of education tend to lower trust in banks. Access to information regardless of the type of media disseminating the information (newspapers, television or Internet) seem to have no impact on trust in banks. Economic values influence trust in banks. In particular, individuals who favour inequality as an incentive for individual effort or support an expanded government ownership role in the economy tend to trust banks more.

Trust in Financial Institutions: A Survey

“…have higher trust in domestic banks than those without a strong party affiliation. Fungáčová and Weill (2018) report that gender is not significantly related to trust in banks. However, Ennew and Sekhon (2007), Fungácová et al…”

“…Van der Cruijsen et al (2016) conclude that more educated people are more likely to consider the possibility of bank failure than less educated people. Likewise, Fungáčová and Weill (2018) find that trust is low for more highly educated people. But Tranter and Booth (2019) report that trust in insurance companies is relatively high for individuals holding a post-secondary certificate or diploma and for those who last attended a government school.…”

“…However, they find no relationship with individuals' environmental concerns. Fungáčová and Weill (2018) show that trust in Chinese banks is relatively low for members of the Communist Party. Tranter and Booth (2019) find that trust in insurance companies and banks and financial institutions in Australia is higher for people who identify with the Liberal Party and the National Party than for those who identify with other political parties.…”

“…Naumann (2018) also reports that people with a good financial situation have more trust in their pension providers, while Fungáčová and Weill (2018) report that trust in banks is significantly positively related to the satisfaction with the current financial situation. In constrast, it is not significantly related to income.…”

“…In case of health insurers trust is negatively related to mental health (Dugan et al, 2005). Fungáčová and Weill (2018) report that trust in banks is unrelated to self-assessed health.…”