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Mattresses versus Banks - The Effect of Trust on Portfolio Composition

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  • Tom Coupe

    ()
    (Kyiv School of Economics, Kyiv Economic Institute)

Abstract

This paper adds to the growing literature that studies whether trust affects the financial decisions of people. More specifically, we investigate whether lack of trust in banks can explain why people save their savings in cash, ‘under the mattress’, rather than deposit their savings at the bank. We find a significant effect of lack of trust on the likelihood that a person saves money in cash but also that lack of trust can only provide part of the explanation for the ‘money under the mattress’ phenomenon. Other factors that matter are the financial awareness and access to bank services.

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File URL: http://repec.kse.org.ua/pdf/KSE_dp40.pdf
File Function: June 2011
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Bibliographic Info

Paper provided by Kyiv School of Economics in its series Discussion Papers with number 40.

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Date of creation: Jun 2011
Date of revision:
Handle: RePEc:kse:dpaper:40

Note: Journal of Development Economics
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Keywords: trust; bank deposits; cash savings; financial awareness;

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  1. Markus Knell & Helmut Stix, 2009. "Trust in Banks? Evidence from normal times and from times of crises," Working Papers 158, Oesterreichische Nationalbank (Austrian Central Bank).
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Cited by:
  1. Helmut Stix, 2012. "Why Do People Save in Cash? Distrust, Memories of Banking Crises, Weak Institutions and Dollarization," Working Papers 178, Oesterreichische Nationalbank (Austrian Central Bank).
  2. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda," Working Papers 1027, Economic Growth Center, Yale University.

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