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Social trust and use of banking services across households in 28 transitional countries


  • Afandi, Elvin
  • Habibov, Nazim


In this paper, we use survey data from a sample of 29,000 households from 28 transitional countries and Turkey to address two main questions: (i) is there any effect of social trust on the use of banking services and (ii) what are the household-level and country-specific determinants of using banking services in transitional countries. We found that the higher level of trust in people predicts a greater level in use of banking services by households regardless of the model specifications and econometric adjustments employed. This association appears to be more prominent among less educated respondents and in countries with low levels of legal enforcement. The results also suggest that location, income and wealth of households, along with country income level, legal enforcement and inflation rates strongly affect the decisions made by households regarding their use of banking services. In contrast, we found either a very small or non-significant impact with regard to bank ownership structure on the use of banking services across households.

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  • Afandi, Elvin & Habibov, Nazim, 2012. "Social trust and use of banking services across households in 28 transitional countries," MPRA Paper 46997, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:46997

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    References listed on IDEAS

    1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
    2. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
    3. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    4. DeanS. Karlan, 2007. "Social connections and group banking," Economic Journal, Royal Economic Society, vol. 117(517), pages 52-84, February.
    5. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
    6. Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, March.
    7. van Bastelaer, Thierry & Leathers, Howard, 2006. "Trust in Lending: Social Capital and Joint Liability Seed Loans in Southern Zambia," World Development, Elsevier, vol. 34(10), pages 1788-1807, October.
    8. Karen Smith Conway & Andrea Kutinova, 2006. "Maternal health: does prenatal care make a difference?," Health Economics, John Wiley & Sons, Ltd., vol. 15(5), pages 461-488.
    9. repec:hrv:faseco:30728041 is not listed on IDEAS
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    More about this item


    use of banking services; social trust; transitional countries;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General

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