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Financial stability and public confidence in banks

Author

Listed:
  • Chernykh, Lucy
  • Davydov, Denis
  • Sihvonen, Jukka

Abstract

We use a novel, household opinions-based measure – Public Confidence in a Bank – to explore the role of bank-level and system-wide determinants of customers’ trust in banks. Our study covers a panel of approximately 260 large Russian commercial banks publicly monitored during 2010–2017. We find that public confidence in a bank is highly sensitive to the industry-level financial stability indicators, but less sensitive to bank-level risk characteristics. This result reveals an important role of overall banking sector stability in determining public perception of the safety and soundness of individual banks.

Suggested Citation

  • 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.
  • Handle: RePEc:bof:bofitp:2019_002
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    File URL: https://helda.helsinki.fi/bof/bitstream/123456789/16050/1/dp0219.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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