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Pre- and Post-Crisis Trust in Banks: Lessons from Transitional Countries

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  • Elvin Afandi and Nazim Habibov

    (Islamic Corporation for the Development of the Private Sector)

Abstract

We study the factors determining the level of trust in banks before and after the 2007- 08 financial crisis and how this crisis reshaped banking trust in transitional countries. We find that younger, rural, educated, banked and generally trusting people tend to have higher confidence towards banks in both periods. Among country-level covariates, growth rate of GDP and Rule of Law remain significantly associated with banking trust in both periods. Finally, our findings indicate that the financial crisis has temporary impact on trust in banks since pulling back the rate of GDP growth tends to recover banking trust.

Suggested Citation

  • Elvin Afandi and Nazim Habibov, 2017. "Pre- and Post-Crisis Trust in Banks: Lessons from Transitional Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(1), pages 73-94, March.
    • Handle: RePEc:jed:journl:v:42:y:2017:i:1:p:73-94
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    References listed on IDEAS

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    Cited by:

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    4. Marie-Claire Broekhoff & Carin van der Cruijsen & Jakob de Haan, 2023. "Towards financial inclusion: trust in banks’ payment services among groups at risk," Working Papers 795, DNB.
    5. van der Cruijsen, Carin & de Haan, Jakob & Jonker, Nicole, 2022. "Has the COVID-19 pandemic affected public trust? Evidence for the US and the Netherlands," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1010-1024.
    6. Carin van der Cruijsen & Jakob de Haan & Ria Roerink, 2023. "Trust in financial institutions: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1214-1254, September.
    7. Isaac Abunyuwah, 2020. "Partial Ordered Logit Analysis of Confidence Levels in Financial Institutions in Ghana. The Case of Asante Mampong Municipality," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(7), pages 1-21, July.
    8. Chernykh, Lucy & Davydov, Denis & Sihvonen, Jukka, 2023. "Financial Stability and Public Confidence in Banks," Journal of Financial Stability, Elsevier, vol. 69(C).
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    10. Chernykh, Lucy & Davydov, Denis & Sihvonen, Jukka, 2019. "Financial stability and public confidence in banks," BOFIT Discussion Papers 2/2019, Bank of Finland, Institute for Economies in Transition.
    11. Chernykh, Lucy & Davydov, Denis & Sihvonen, Jukka, 2019. "Financial stability and public confidence in banks," BOFIT Discussion Papers 2/2019, Bank of Finland Institute for Emerging Economies (BOFIT).

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    More about this item

    Keywords

    Trust in Banks; Financial Crisis; Transitional Countries;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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