When Does the General Public Lose Trust in Banks?

Jansen, David‐Jan; Mosch, Robert; Cruijsen, Carin van der

doi:10.2139/ssrn.2373084

Cited by 18 publications

(26 citation statements)

References 32 publications

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“…Guiso et al (2008) define trust as the subjective probability individuals attribute to the possibility of being cheated. Recent studies confirm that trust in banks declines significantly during troubled times (Stevenson and Wolfers, 2011; Sapienza and Zingales’ Financial Trust Index, Knell and Stix, 2015), especially if there is evidence of conflicts of interest – such as moral hazard – or corruption (Jansen et al , 2015). Stevenson and Wolfers (2011) find that the overall unemployment rate exerts a significant and negative impact on trust measures, which is particularly pronounced for trust in banks.…”

Section: Literature Reviewmentioning

confidence: 99%

Blockchain, herding and trust in peer-to-peer lending

Gonzalez

2019

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Purpose The gradual implementation of blockchain technology in peer-to-peer (P2P) lending platforms facilitates safer, transparent and quick access to funds without having to deal with the more complex and costly processes of banks. Beyond that, the purpose of this paper is to examine trust-enhancing heuristics that show a need for blockchain to assist in monitoring and bad loan recovery. Design/methodology/approach This study examines 909 lending decisions by 303 finance students on a mock P2P site. Each participant was asked to make three lending decisions. The loan applications were identical with the exception of a female or male photo (vs an icon) and reports of having raised half the loan in either 2 or 11 days (vs 7). Findings Investors who have experienced financial trauma are more likely to herd and lend higher amounts to loan applicants that are highly trusted by other lenders. This effect is more pronounced for male investors lending to highly trusted female loan applicants. Practical implications Blockchain can compensate for behavioral biases and improve monitoring by helping track digital money transactions and assisting in bad loan recovery efforts. Originality/value This study is the first behavioral experiment to examine herding in P2P lending. The findings complement and corroborate those by Gonzalez and Komarova (2014, 2015) and emphasize the need for blockchain to assist beyond trusted records and safe transfers of funds.

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Section: Literature Reviewmentioning

confidence: 99%

Blockchain, herding and trust in peer-to-peer lending

Gonzalez

2019

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“…In the Netherlands, Jansen et al (2015) document the conditions that might cause people to lose trust in banks. They perform two surveys of approximately 2500 Dutch households in 2010 and 2012 with hypothetical scenarios associated with the financial crisis.…”

Section: Literature On Trust In Banksmentioning

confidence: 99%

“…Research on trust in banks is surprisingly scarce, and no study to the best of our knowledge specifically addresses the topic of trust in banks in China. With the exception of the cross‐country study from Fungáčová, Hasan, and Weill (), only a handful of single‐country studies provide evidence on the level and the determinants of trust in banks (Sapienza & Zingales, , for the USA; Jansen, Mosch, & van der Cruijsen, , for the Netherlands; Knell & Stix, , for Austria). Thus, the objective of the present paper is to provide an initial empirical investigation of the determinants of trust in banks in China.…”

Section: Introductionmentioning

confidence: 99%

Trusting banks in China

Fungáčová

Weill

2018

Pacific Economic Review

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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.

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“…Household debt increased in the Netherlands between 2000 and 2007, even more than in the US (Mian and Sufi, 2015: 6). Falling incomes and rising unemployment during the downturn caused deterioration in the housing market in the Netherlands but did not lead to forced sales (Jansen et al ., 2013). Fittingly for a country where much of the population lives below sea level, about 30 per cent of Dutch homeowners had negative equity as late as 2015.…”

Section: The Global Economic Crisis and Household Over-indebtednessmentioning

confidence: 99%

The Legacy of Economic Recession in Terms of Over-Indebtedness: A Framework and Review of the Evidence

Hiilamo

2020

Social Policy and Society

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With the expansion of credit, low interest rates and overly optimistic expectations about future economic and housing price developments, mortgage lending soared in most OECD countries in the run-up to the 2008 global economic crisis. The crisis revealed the hidden epidemic of over-indebtedness, which continues to overshadow the lives of millions in rich countries. In the wake of the global economic crisis, the household debt crisis led to worsening economic conditions and put pressure on government finances, which caused further income shocks in the form of austerity measures such as social welfare cuts and higher taxes. This article is based on a scoping review aimed at summarising and reflecting on the available literature. It analyses the effects of over-indebtedness on individuals and societies across six OECD countries: Finland, Germany, the Netherlands, Norway, the UK and the US.

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When Does the General Public Lose Trust in Banks?

Cited by 18 publications

References 32 publications

Blockchain, herding and trust in peer-to-peer lending

Blockchain, herding and trust in peer-to-peer lending

Trusting banks in China

The Legacy of Economic Recession in Terms of Over-Indebtedness: A Framework and Review of the Evidence

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