Trust and trusting behavior in financial institutions: Evidence from South Korea

Abstract

This paper considers trust and trusting behavior towards financial institutions in South Korea. The survey data shows that people on average have higher trust towards financial institutions than towards other individual counterparties, although trust towards financial institutions in South Korea can still be improved further. My results imply that financial institutions should put more efforts in earning trust especially from those at the low end of wealth spectrum and those in young age, so that they can fully benefit from institutional services and be protected from potential frauds more likely to happen outside of regulatory boundary. This paper addresses a relative notion of trust and trusting behavior, i.e. trusting financial institutions relative to trusting other individual counterparties.