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Structure and Development of Financial Institutions and Links with Trust: Cross-Country Evidence

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  • Arturo Galindo

    ()

  • Alberto Chong

    ()

  • César Calderón

Abstract

We explore the links between trust and a broad range of financial structure and development measures. Our base sample is a cross section of 48 countries and the analysis covers the period 1980-1994. We use a new World Bank data set that provides the most comprehensive coverage of financial development and structure to this date. We find that trust is correlated with financial depth and efficiency as well as with stock market development. Results hold when using an instrumental variable approach, and they are robust to changes in specification when using a formal Sala-i-Martín sensitivity analysis.

Suggested Citation

  • Arturo Galindo & Alberto Chong & César Calderón, 2001. "Structure and Development of Financial Institutions and Links with Trust: Cross-Country Evidence," Research Department Publications 4251, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4251
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    Cited by:

    1. Samouel BEJI, 2007. "Financial Openness and Financial Development in the South Mediterranean Sea Countries: Institutional Approach and Calculation ofm Development Thresholds," European Research Studies Journal, European Research Studies Journal, vol. 0(3-4), pages 107-107.
    2. Eduardo Lora & Patricia Cortés, 2001. "Obstacles to Business Development and the Size of Firms in Latin America," Research Department Publications 4257, Inter-American Development Bank, Research Department.
    3. Baliamoune-Lutz, Mina, 2011. "Trust-based social capital, institutions, and development," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(4), pages 335-346, August.
    4. Lobna Bousrih & Mohamed Trabelsi, 2005. "Libéralisation financière, développement financier et crises bancaires : le rôle du capital social," Revue d'Économie Financière, Programme National Persée, vol. 81(4), pages 83-106.
    5. Mpabe Bodjongo, Mathieu Juliot, 2012. "Infrastructures institutionnelles et développement financier en zone CEMAC
      [Institutional infrastructures and financial development in zone CEMAC]
      ," MPRA Paper 37824, University Library of Munich, Germany.
    6. Eduardo Lora & Patricia Cortés & Ana María Herrera, 2001. "Los obstáculos al desarrollo empresarial y el tamaño de las firmas en América Latina," IDB Publications (Working Papers) 2144, Inter-American Development Bank.
    7. Ng, Adam & Ibrahim, Mansor H. & Mirakhor, Abbas, 2016. "Does trust contribute to stock market development?," Economic Modelling, Elsevier, vol. 52(PA), pages 239-250.
    8. Mondher Cherif & Christian Dreger, 2016. "Institutional Determinants of Financial Development in MENA countries," Review of Development Economics, Wiley Blackwell, vol. 20(3), pages 670-680, August.
    9. repec:zbw:espost:180831 is not listed on IDEAS

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