Trust in Banks during Normal and Crisis Times—Evidence from Survey Data

Abstract

We study the evolution of people's trust in banks during the global financial crisis, and the factors that determine its level. Austrian survey data show that trust in banks declined sizeably during the financial crisis, but the lowest observed trust level (60%) is still higher than that of many other institutions. We establish that a trust decline is related to agents' subjective view of the economic situation and the direct experience of bank failures. Deposit insurance stabilizes banking trust. Both the lack of bank collapses and the extension of deposit insurance coverage had a cushioning effect on trust in banks.

Trust in the banking sector: EU experience and evidence from Ukraine

“…Knell and Stix (2009) describe the reasons behind the decline in trust in Austrian banks during the global financial crisis, while making an assessment of the factors that determine the level of trust in banks. In this case, the authors find that the extension of deposit insurance coverage in October 2008 had a positive effect on trust.…”

To stay or go? Consumer bank switching behaviour after government interventions

“…Patterns are similar in European countries, confirming that the drop in trust was universal (e.g. Guiso, 2010;Knell and Stix, 2015). Uslaner (2014) finds that the financial crisis of 2008 has had a stronger impact on trust in institutions than on generalized trust in the US.…”

Payments Data: Do Consumers Want to Keep Them in a Safe or Turn Them into Gold?

“…Trust in banks is related to various factors. For example, Knell and Stix (2015) show that trust is positively related to the level of income and lower for unemployed people than for employed people. Trust in banks also depends on fraud (Guiso, 2010) and macroeconomic variables such as the unemployment rate (Stevenson and Wolfers, 2011).…”

“…Trust in banks also depends on fraud (Guiso, 2010) and macroeconomic variables such as the unemployment rate (Stevenson and Wolfers, 2011). Personal adverse financial crisis experiences negatively affect trust in banks Knell and Stix, 2015). Using survey evidence on Spain, Carbo-Valverde et al (2013) find that trust in banks is significantly related to consumers' perceptions of performance characteristics and attributes of banks.…”