IDEAS home Printed from https://ideas.repec.org/p/dnb/dnbwpp/402.html
   My bibliography  Save this paper

When does the general public lose trust in banks?

Author

Listed:
  • David-Jan Jansen
  • Robert Mosch
  • Carin van der Cruijsen

Abstract

When does the general public lose trust in banks? We provide empirical evidence using responses by Dutch survey participants to eight hypothetical scenarios. We find that members of the general public care strongly about executive compensation. Negative media reports, falling stock prices, and opaque product information also affect trust in banks. Experiencing a bank bailout leads to less concern about government intervention, while experience of a bank failure leads to greater concern on bonuses.

Suggested Citation

  • David-Jan Jansen & Robert Mosch & Carin van der Cruijsen, 2013. "When does the general public lose trust in banks?," DNB Working Papers 402, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:402
    as

    Download full text from publisher

    File URL: https://www.dnb.nl/en/binaries/working%20Paper%20402_tcm47-299617.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jianyun Tang & Mary Crossan & W. Glenn Rowe, 2011. "Dominant CEO, Deviant Strategy, and Extreme Performance: The Moderating Role of a Powerful Board," Journal of Management Studies, Wiley Blackwell, vol. 48(7), pages 1479-1503, November.
    2. María Penas & Günseli Tümer-Alkan, 2010. "Bank Disclosure and Market Assessment of Financial Fragility: Evidence from Turkish Banks’ Equity Prices," Journal of Financial Services Research, Springer;Western Finance Association, pages 159-178.
    3. Michael Hurd & Maarten Van Rooij & Joachim Winter, 2011. "Stock market expectations of Dutch households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 416-436, April.
    4. Carin van der Cruijsen & Jakob de Haan & David-Jan Jansen & Robert Mosch, 2010. "Knowledge and Opinions about Banking Supervision: Evidence from a Survey of Dutch Households," DNB Working Papers 275, Netherlands Central Bank, Research Department.
    5. Betsey Stevenson & Justin Wolfers, 2011. "Trust in Public Institutions over the Business Cycle," American Economic Review, American Economic Association, pages 281-287.
    6. Annamaria Lusardi & Olivia S. Mitchell, 2008. "Planning and Financial Literacy: How Do Women Fare?," American Economic Review, American Economic Association, pages 413-417.
    7. Saskia E. van Ewijk & Ivo J.M. Arnold, 2014. "How bank business models drive interest margins: evidence from US bank-level data," The European Journal of Finance, Taylor & Francis Journals, vol. 20(10), pages 850-873, October.
    8. Rajkamal Iyer & Manju Puri, 2008. "Understanding bank runs: the importance of depositor-bank relationships and networks," Proceedings 1095, Federal Reserve Bank of Chicago.
    9. Marc Flandreau, Stefano Ugolini, 2011. "Where It All Began: Lending of Last Resort and the Bank of England during the Overend, Gurney Panic of 1866," IHEID Working Papers 04-2011, Economics Section, The Graduate Institute of International Studies.
    10. Federica Teppa & Corrie Vis, 2012. "The CentERpanel and the DNB Household Survey: Methodological Aspects," DNB Occasional Studies 1004, Netherlands Central Bank, Research Department.
    11. Luc Laeven & Fabián Valencia, 2013. "Systemic Banking Crises Database," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(2), pages 225-270, June.
    12. van der Cruijsen, Carin & de Haan, Jakob & Jansen, David-Jan & Mosch, Robert, 2013. "Knowledge and opinions about banking supervision: Evidence from a survey of Dutch households," Journal of Financial Stability, Elsevier, pages 219-229.
    13. Fahlenbrach, Rüdiger & Stulz, René M., 2011. "Bank CEO incentives and the credit crisis," Journal of Financial Economics, Elsevier, pages 11-26.
    14. Carin A.B. Van Der Cruijsen & Jakob De Haan & David-Jan Jansen & Robert H.J. Mosch, 2012. "Households' Decisions on Savings Accounts After Negative Experiences with Banks During the Financial Crisis," Journal of Consumer Affairs, Wiley Blackwell, vol. 46(3), pages 436-456, September.
    15. Paul Goldsmith-Pinkham & Tanju Yorulmazer, 2010. "Liquidity, Bank Runs, and Bailouts: Spillover Effects During the Northern Rock Episode," Journal of Financial Services Research, Springer;Western Finance Association, pages 83-98.
    16. Hyun Song Shin, 2009. "Reflections on Northern Rock: The Bank Run That Heralded the Global Financial Crisis," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 101-119, Winter.
    17. 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).
    18. Hamid Mehran & Alan Morrison & Joel Shapiro, 2011. "Corporate governance and banks: what have we learned from the financial crisis?," Staff Reports 502, Federal Reserve Bank of New York.
    19. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1.
    20. Schwartz, Anna J., 1989. "Money in Historical Perspective," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226742281.
    21. Ulrike Malmendier & Stefan Nagel, 2011. "Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 373-416.
    22. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, pages 497-508.
    23. Jakob Haan & Razvan Vlahu, 2016. "Corporate Governance Of Banks: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 30(2), pages 228-277, April.
    24. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, pages 14-23.
    25. Rajkamal Iyer & Manju Puri, 2008. "Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks," NBER Working Papers 14280, National Bureau of Economic Research, Inc.
    26. Klapper, Leora & Lusardi, Annamaria & Panos, Georgios A., 2013. "Financial literacy and its consequences: Evidence from Russia during the financial crisis," Journal of Banking & Finance, Elsevier, vol. 37(10), pages 3904-3923.
    27. Ann Yang, 2013. "Decision Making for Individual Investors: A Measurement of Latent Difficulties," Journal of Financial Services Research, Springer;Western Finance Association, pages 303-329.
    28. Ulrike Malmendier & Geoffrey Tate & Jon Yan, 2011. "Overconfidence and Early‐Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies," Journal of Finance, American Finance Association, vol. 66(5), pages 1687-1733, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fungáčová, Zuzana & Hasan, Iftekhar & Weill, Laurent, 2016. "Trust in banks," BOFIT Discussion Papers 7/2016, Bank of Finland, Institute for Economies in Transition.
    2. Hauptmeier, Sebastian & Sanchez-Fuentes, A. Jesus & Schuknecht, Ludger, 2011. "Towards expenditure rules and fiscal sanity in the euro area," Journal of Policy Modeling, Elsevier, pages 597-617.
    3. David-Jan Jansen & Matthias Neuenkirch, 2017. "News Consumption, Political Preferences, and Accurate Views on Inflation," Research Papers in Economics 2017-03, University of Trier, Department of Economics.
    4. Carin van der Cruijsen & David-Jan Jansen & Maarten van Rooij, 2014. "The rose-colored glasses of homeowners," DNB Working Papers 421, Netherlands Central Bank, Research Department.
    5. Fungáčová, Zuzana & Weill, Laurent, 2017. "Trusting banks in China," BOFIT Discussion Papers 9/2017, Bank of Finland, Institute for Economies in Transition.
    6. John Lewis, 2011. "How has the Financial Crisis Affected the Eurozone Accession Outlook in Central and Eastern Europe?," Chapters,in: The Economic Crisis and European Integration, chapter 11 Edward Elgar Publishing.
    7. Carin Cruijsen & Jakob Haan & David-Jan Jansen, 2016. "Trust and Financial Crisis Experiences," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, pages 577-600.
    8. C. E. Jager, 2017. "A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation," Journal of Consumer Policy, Springer, vol. 40(1), pages 25-49, March.
    9. Carin van der Cruijsen, 2017. "Payments data: do consumers want to keep them in a safe or turn them into gold?," DNB Working Papers 563, Netherlands Central Bank, Research Department.
    10. Richhild Moessner, 2014. "Effects of explicit FOMC policy-rate guidance on equities and risk measures," Applied Economics, Taylor & Francis Journals, vol. 46(18), pages 2139-2153, June.
    11. David-Jan Jansen, 2016. "Housing and mortgage dynamics: evidence from household surveys," DNB Working Papers 522, Netherlands Central Bank, Research Department.
    12. Carin van der Cruijsen & David-Jan Jansen & Jakob de Haan, 2015. "How Much Does the Public Know about the ECB’s Monetary Policy? Evidence from a Survey of Dutch Households," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 169-218, December.

    More about this item

    Keywords

    trust; banks; general public; financial crisis; survey data;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dnb:dnbwpp:402. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rob Vet). General contact details of provider: http://edirc.repec.org/data/dnbgvnl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.