Managerś assessment of thin and thick trust: The importance of benevolence in interbank relations

Abstract

This qualitative interview study investigates managers’ ongoing relationships in inter-organisational banks, examining how they assess trust in their counterparts and how they decide if the relationship should continue. In normal times, formal information can assess thin trust – the ability and integrity of their counterparts. In times of impending crisis, senior bank managers rely on the evaluation of thick personal trust: benevolence. To be a trustworthy party in a financial crisis, benevolence must be established between counterpart banks before the crisis. Benevolence is a redundant component of trust in normal times, but extremely important during a crisis. Lack of benevolence established in normal times may, in fact, be at least partially responsible for the fragility of interfirm agreements and alliances.