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The effect of trust on economic performance and financial access

Author

Listed:
  • Leblang, David
  • Smith, Michael D.
  • Wesselbaum, Dennis

Abstract

This paper uses individual-level data from the Gallup World Poll to examine the effect of institutional trust on individual-level outcomes. We make three contributions to the literature. First, the data set allows us to examine whether the relationship varies by the stage of economic development. Second, unlike most studies, we examine the relationship between trust and performance allowing for a non-linear relationship and identify the optimal level of trust. Third, in addition to individual-level income, we examine the effect of individual-level trust on individual-level access to financial services, an important factor in economic development and financial well-being.

Suggested Citation

  • Leblang, David & Smith, Michael D. & Wesselbaum, Dennis, 2022. "The effect of trust on economic performance and financial access," Economics Letters, Elsevier, vol. 220(C).
    • Handle: RePEc:eee:ecolet:v:220:y:2022:i:c:s0165176522003585
    DOI: 10.1016/j.econlet.2022.110884
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    References listed on IDEAS

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    1. Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1015-1049.
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    More about this item

    Keywords

    Financial access; Income; Trust;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • G1 - Financial Economics - - General Financial Markets
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Z1 - Other Special Topics - - Cultural Economics

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