The Predicting Abilities of Social Trust and Good Governance on Economic Crisis Duration

In all successful economic societies, trust is a unity factor. By contrast, the absence of trust leads to poor economic performance and negative social implications. In this paper, we uncover the relationships among social trust, corruption, and the duration of economic crises. Our theoretical foundation is based on a collection of studies from different academic fields, especially political science, sociology, and economics. We test two hypotheses: Hypothesis 1: Social trust has a negative correlation with the duration time of an economic crisis. Hypothesis 2: Corruption has a positive correlation with the duration time of an economic crisis. Our study is based on two methods: descriptive and econometric analysis. As a first step, we perform a descriptive analysis on a dataset including social trust, corruption, and economic crisis as variables. As a second step, we apply econometric techniques to analyse our data. For the hypotheses, we introduce a multiple regression with control variables. Our dataset includes 11,364 observations distributed across 211 countries. The quantitative findings support Hypothesis 1 suggesting that, as the duration of economic crises increases, social trust declines. Similarly, when the duration of the economic crisis decreases, social trust increases. Hypothesis 2 was rejected. Connecting our theoretical stance with the empirical evidence, we propose several possible explanations for the findings and provide both theoretical and practical implications.