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Impact of general trust on bank risk-taking: the moderating effect of confidence in banks

Author

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  • Heba Masoud
  • Mohamed Albaity

Abstract

Purpose - This study examines the effect of general trust (GT) and confidence in banks (CIB) on bank risk-taking. Besides, it explores the moderating role of CIB on the relationship between GT and bank risk-taking. Design/methodology/approach - Secondary data was obtained from the World Value Survey, World Bank and BankFocus from 2011 to 2018. Two-step system GMM estimator was used to examine the links between the GT and CIB with bank risk-taking in MENA region. Findings - Results indicated that both GT and CIB negatively influenced bank risk-taking. Moreover, CIB weakened the negative relationship between GT and bank risk-taking. However, the results were different for MENA region as compared to the full sample. Originality/value - The studies on the link between trust and bank risk-taking are either carried out on an international sample or using a developed economies sample. However, the authors believe that developing economies might exhibit different relationships due to cultural and structural differences present in developed countries. Besides, the authors believe that testing the moderating effect of CIB could shed more light on the differences between developing and developed countries.

Suggested Citation

  • Heba Masoud & Mohamed Albaity, 2021. "Impact of general trust on bank risk-taking: the moderating effect of confidence in banks," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 49(3), pages 453-471, March.
    • Handle: RePEc:eme:jespps:jes-09-2020-0479
    DOI: 10.1108/JES-09-2020-0479
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    Citations

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    Cited by:

    1. Shah, Syed Faisal & Albaity, Mohamed, 2022. "The role of trust, investor sentiment, and uncertainty on bank stock return performance: Evidence from the MENA region," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).

    More about this item

    Keywords

    General trust; Confidence in banks; MENA; GMM; Moderating effect; G10; G20; G21;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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