Trust in Banks During Normal and Crisis Times - Evidence from Survey Data

26 Pages Posted: 18 Jan 2016

See all articles by Markus Knell

Markus Knell

Austrian National Bank - Economic Studies Division; University of Zurich

Helmut Stix

Oesterreichische Nationalbank - Economic Studies Division

Date Written: December 2015

Abstract

We study the evolution of people's trust in banks during the global financial crisis, and the factors that determine its level. Austrian survey data show that trust in banks declined sizeably during the financial crisis, but the lowest observed trust level (60%) is still higher than that of many other institutions. We establish that a trust decline is related to agents’ subjective view of the economic situation and the direct experience of bank failures. Deposit insurance stabilizes banking trust. Both the lack of bank collapses and the extension of deposit insurance coverage had a cushioning effect on trust in banks.

Suggested Citation

Knell, Markus and Stix, Helmut, Trust in Banks During Normal and Crisis Times - Evidence from Survey Data (December 2015). Economica, Vol. 82, pp. 995-1020, 2015, Available at SSRN: https://ssrn.com/abstract=2716506 or http://dx.doi.org/10.1111/ecca.12162

Markus Knell (Contact Author)

Austrian National Bank - Economic Studies Division ( email )

POB 61
Vienna, A-1011
Austria
+43 1 404 20 7205 (Phone)
+43 1 404 20 7299 (Fax)

HOME PAGE: http://www.oenb.at/

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Helmut Stix

Oesterreichische Nationalbank - Economic Studies Division ( email )

Otto-Wagner Platz 3
POB 61
Vienna 1011
Austria

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