Do we bank on regulation or reputation? A meta-analysis and meta-regression of organizational trust in the financial services sector

Abstract

Purpose – Trust in financial institutions has been eroded through the collapse of mortgage-related securities, with confidence further denuded through well publicized cases of rogue traders and rate fixing cases, such as with the Lehman brothers, the Libor rate-fixing scandals, and the hypo real estate breakdown. In response to these events, governments have introduced a range of distinct policy initiatives designed to restore trust in this sector. Thus, the question arises: are these regulations and control mechanisms sufficient in isolation, or are there other elements that this sector needs to pay attention to in efforts to build and sustain customers’ trust? The paper aims to discuss these issues. Design/methodology/approach – There is a compelling agenda for both financial organizations and academics to understand better organizational trust in this context especially the role and impact of regulatory mechanisms in its development and repair. The paper therefore examines the special facets of the fin...