When Does the General Public Lose Trust in Banks?

Jansen, David‐Jan; Mosch, Robert; Cruijsen, C.A.B. van der

doi:10.1007/s10693-014-0201-y

Cited by 72 publications

(62 citation statements)

References 33 publications

(10 reference statements)

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“…For instance, minimum competence requirements for lenders and credit intermediaries can lead to a better understanding of financial products as well as customers and their needs (competence), and the provision of a short information document about a financial product may increase transparency. 65 On the other hand, from empirical research 66 , it can be gathered that high bonuses are the main reason why people have lost their trust in banks (Jansen et al 2015). 67 The question therefore remains whether the new legislation can counterbalance news items about, for instance, generous pay rises for board members of banks as compensation for the ban on bonuses (Deutsch and Neely 2014;Wallace 2015).…”

Section: Legislation As a Determinant Of Trust: One Of Many Not One mentioning

confidence: 99%

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A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

Jager

2016

J Consum Policy

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The decrease in consumer trust in the financial sector and the attempts to restore it are receiving a great deal of interest, especially since the financial crisis at the end of 2008. EU legislation is one of the ways that attempts have been made to regain the trust of investors. In the second section, the concept of "trust" will be subjected to an in-depth yet not exhaustive examination, with the aim of reducing its elusiveness. The third section will discuss three recent EU proposals. Examination of these legislative proposals reveals that (1) the term "trust" is not precisely defined, and (2) without stating further reasons, the restoration of trust in the financial sector is considered a worthy goal. In light of the aforementioned, the fourth section will address the desirability of clarity regarding the term "trust." The fifth section will then assess whether legislation is a suitable means to restore consumer trust, and the sixth section explores whether the restoration of consumer trust in the financial sector is a worthy goal. Indeed, the European legislator and other policymakers seem to consider a low level of consumer trust a bad thing, a high level of consumer trust a good thing, and a higher level of consumer trust an even better thing. This article will argue that it is doubtful whether EU legislation is a suitable means for restoring consumer trust in the financial sector and, moreover, that considering the perverse incentives in the current financial sector, among other things, a realistic degree of trust, implying a certain distrust, appears preferable.Keywords Trust . Financial markets . Financial sector . Consumer protection . Financial crisis . European legislation J Consum Policy (2017) 40:25-49 DOI 10.1007 This article is partly based on an article published in the Dutch journal THEMIS (De Jager, C.E. (2015). De financiële sector: weg (van) vertrouwen of op weg naar vertrouwen? Over het nastreven van consumentenvertrouwen in de financiële sector door middel van EU wetgeving na de financiële crisis. Rechtsgeleerd Magazijn Themis, 6,[244][245][246][247][248][249][250][251][252][253][254][255][256][257].

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Section: Legislation As a Determinant Of Trust: One Of Many Not One mentioning

confidence: 99%

“…However, the studies referred to do not include surveys. 67 Additionally, negative press releases, stock-market losses, and nontransparent product information are important factors (Jansen et al 2015).…”

Section: Limited Effectivenessmentioning

confidence: 99%

A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

Jager

2016

J Consum Policy

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“…Against expectations, Holland's nationalization of banks did not lead to a loss of confidence in the banks. A more significant factor was the personal loses of the respondents during the GFC in 2007 onwards [Jansen, Mosch and Cruijsen 2013].…”

Section: Shadow Banking From a Neo-institutional Perspectivementioning

confidence: 99%

Shadow Banking as Seen From a Behavioural and Neoclassical Finance Perspective

Solarz¹

2015

Folia Oeconomica

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Money is not merely a highly exchangeable commodity or the symbol of value established in exchange by utility-seeking individuals. Private money is a value sui generis that is established by reactions between issuers-shadow banking and users of money. These relations can be explained by the behavioral theory of finance and neoclassic theory of finance.Shadow banking and classical banking relations are characterized by the relations of both cooperation/trust and conflict/struggle, which give private money its value and produce the alternating phases of order and disorder.If the link between the public and the private sector is to be bypassed or severed, should this be seen as an exceptional emergency measure or the first step in radical structural change in the social relations for the production of money? The Neo-institutional answer on this question is that the shadow banking is now in the first phase of its institutionalization. Shadow banking is a fundamental and systemic financial innovation. It encompasses all financial activity, except traditional banking, which requires a private or public guarantee and backing to operate.

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“…In a recent analysis, Jansen et al (2015) examine what could drive a sudden loss of trust in financial institutions. They present members of the Dutch general public with eight hypothetical scenarios related to the financial crisis and ask to what extent these events would harm trust in their banks.…”

Section: Introductionmentioning

confidence: 99%

“…For instance, having the experience of being a client of a bank that failed during the crisis results in greater concerns regarding bonuses. A major difference with the study of Jansen et al (2015) is that in the present paper respondents are directly asked about their trust in banks and the banking supervisor instead of being presented with hypothetical scenarios.…”

Section: Introductionmentioning

confidence: 99%

Trust and Financial Crisis Experiences

2015

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Using eight annual household surveys for the Netherlands between 2006 and 2013, we find that respondents' personal adverse financial crisis experiences do not only reduce their trust in banks, but also have an immediate negative effect on generalized trust. Respondents who were customers of a bank that ran into problems have less trust in banks than respondents without this experience. Respondents who were customer of a bank that failed have a significantly stronger decline of generalized trust than other respondents. Our results also suggest that personal financial crisis experiences do not have a significant direct effect on trust in the banking supervisor.

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When Does the General Public Lose Trust in Banks?

Cited by 72 publications

References 33 publications

A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

Shadow Banking as Seen From a Behavioural and Neoclassical Finance Perspective

Trust and Financial Crisis Experiences

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