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The decline of trust across the U.S. finance industry

Author

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  • Limbach, Peter
  • Rau, P. Raghavendra
  • Schürmann, Henrik

Abstract

We provide evidence on the evolution of generalized trust among finance professionals using data from the General Social Survey over the period 1978–2016. Accounting for demographic, regional, and socioeconomic characteristics, we document a significant decline in the level of trust among finance professionals relative to the decline of trust in the U.S. population. This decline is unique to the finance industry and is particularly strong in the early years of the sample when finance professionals initially exhibited a higher level of trust than the average American. The decline occurs across all subsectors in finance and at all hierarchy levels.

Suggested Citation

  • Limbach, Peter & Rau, P. Raghavendra & Schürmann, Henrik, 2023. "The decline of trust across the U.S. finance industry," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 324-344.
    • Handle: RePEc:eee:jeborg:v:213:y:2023:i:c:p:324-344
    DOI: 10.1016/j.jebo.2023.07.006
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    More about this item

    Keywords

    Finance industry; Generalized trust; Implicit incentives; Professional environment; Socialization;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics

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