Trust and the global financial crisis

Abstract

Trust is central to exchange and growth. Nowhere is this more apparent than in the financial arena. Indeed, the term ‘credit’ is derived from the Latin word credere, meaning ‘to believe or trust’ (Oxford Dictionary, 2003). In the latter part of 2008 into 2009, with the collapse of Bear Sterns and Lehman Brothers, trust was eroded and financial institutions stopped lending to one another. The subsequent lack of credit caused a broader economic slowdown and the lack of trust spread from Wall Street to Main Street and across the globe. The result was a rise in unemployment in many countries and, according to the International Monetary Fund, the destruction of $4.1 trillion worth of wealth on a global scale. The Global Financial Crisis (GFC) presents a unique setting to examine trust, trust violation and trust repair from a multi-level perspective that crosses the individual (for example, investors, retirees, employees), organizational(for example, Lehman Brothers, Citibank, Goldman Sachs), industry (for example, finance and insurance) and societal (for example, global economy and governments) levels.