Trust In Financial Institutions Research Articles

Фінансова поведінка домогосподарств у контексті їх резильєнтного розвитку

The relevance of the article is related to the need to study the financial behavior of households as one of the factors of ensuring their resilient development in conditions of instability and uncertainty. In the conditions of war, the country’s financial market and the behavior of the subjects of financial relations are the epicenter of the country’s macroeconomic stability, which depends on the resilience of households to risky situations and the quality of life. The specified interrelationship will strengthen under the condition of active prejudice against poverty and state support of the population, which found itself in difficult life circumstances as a result of the war. The purpose of the article is to study the influence of financial behavior and financial instruments on the resilience of the country’s households in conditions of socio-economic instability and uncertain development prospects. The novelty of the work consists in identifying the peculiarities of the financial behavior of households, caused by the growth of wartime risks against the background of real opportunities and trends of their resilient development. The research is based on the use of various data sources and the application of a number of scientific methods (analysis, synthesis, comparison, generalization, selective observations). Modern financial behavior of households combines elements of various models — consumer, savings, investment, credit, insurance, charity, the relationships between which are transformed depending on the action of external and internal factors. In the conditions of war, the motives for forming one or another model of financial behavior of households change, in the choice of which they can be guided by the interests of preserving the status quo or increasing financial assets. The advantages of the saving behavior model of households as the most acceptable for resistance to wartime risks and threats and the transformation of labor income of the population into development investment resources are determined. Unlike most European countries, Ukraine is dominated by channels of unorganized savings of the population due to a low level of trust in banking structures, uncertainty in the future, and efforts to prevent the emergence of new financial risks. The transition to organized forms of savings of the population will ensure the resilience of economic development against the background of the stability of the financial and credit system of the state, trust in it by consumers of financial services. In this context, a sufficient level of profitability of financial instruments and financial literacy of the population are necessary. For its spread, it is necessary to achieve a sufficiently high level of income, rational consumption and possession of effective financial instruments against the background of trust in financial institutions.

Analyzing the impact of trust in financial institutions on Palestinian consumer attitudes towards AI-powered online banking: understanding key influencing factors

Purpose The purpose of this paper is to investigate the factors influencing Palestinian consumer attitudes toward artificial intelligence (AI)-powered online banking, focusing on performance expectancy, effort expectancy, social influence and facilitating conditions while considering the moderating role of trust in financial institutions. Design/methodology/approach To test the hypotheses, an empirical study with a questionnaire was carried out. The study was completed by 362 Palestinian customers who use online banking services. Findings The findings of this paper show that performance expectancy, effort expectancy, social influence and facilitating conditions significantly influence consumer attitudes toward AI-powered online banking. Furthermore, trust in financial institutions as a moderating variable strengthens the impact of performance expectancy, effort expectancy, social influence and facilitating conditions on consumer attitudes toward AI-powered online banking. Therefore, more studies should focus on certain fields and cultural contexts to get a more thorough grasp of the variables influencing adoption and acceptability. Research limitations/implications The study's findings may be specific to the Palestinian context, limiting generalizability. The reliance on self-reported data and a cross-sectional design may constrain the establishment of causal relationships and the exploration of dynamic attitudes over time. In addition, external factors and technological advancements not captured in the study could influence Palestinian consumer attitudes toward AI-powered online banking. Practical implications Financial institutions can leverage the insights from this research to tailor their strategies for promoting AI-powered online banking, emphasizing factors like perceived security and ease of use. Efforts to build and maintain trust in financial institutions are crucial for fostering positive consumer attitudes toward AI technologies. Policymakers can use these findings to inform regulations and initiatives that support the responsible adoption of AI in the financial sector, ensuring a more widespread and effective implementation of these technologies. Originality/value This research delves into Palestinian consumer attitudes toward AI-powered online banking, focusing on trust in financial institutions. It aims to enrich literature by exploring this under-explored area with meticulous examination, robust methodology and insightful analysis. The study embarks on a novel journey into uncharted terrain, seeking to unearth unique insights that enrich the existing literature landscape. Its findings offer valuable insights for academia and practitioners, enhancing understanding of AI adoption in Palestine and guiding strategic decisions for financial institutions operating in the region.

Unravelling the Urban Co-operative Bank Crisis in India examining the Socio-economic and Psychological Impact on Customers

The Urban Co-operative Bank (UCB) crisis has emerged as a significant challenge in the financial landscape. This study aims to unravel the complexities of the crisis, focusing on its origins, progression, and the subsequent repercussions on both a socio-economic and psychological level for the bank's customers. The research employs a multi-dimensional approach to analyze the extent and nature of the crisis. Financial data, regulatory reports, and customer interviews will be utilized to assess the economic impact, including financial losses, disrupted transactions, and potential long-term financial consequences for the affected individuals. Utilizing psychological surveys and interviews, the research seeks to uncover the emotional and mental health implications of financial uncertainty, loss, and disrupted trust in financial institutions. Understanding the psychological dimensions is crucial for designing effective interventions and support mechanisms for affected individuals.

Determinants of financial inclusion in Southeast Asia

ABSTRACT This study examines the determinants of financial inclusion – in terms of bank account ownership, formal saving, and formal borrowing – among countries in Southeast Asia. Using the World Bank Global Findex dataset, we document low rates of financial inclusion in Cambodia, Indonesia, Laos, Myanmar and the Philippines. Individuals’ access to finance through borrowing is also generally low. Results show that income, educational attainment, being employed, and mobile phone ownership are positively associated with all three financial inclusion indicators. Age effects are nonlinear and vary across the financial inclusion indicators. Post-regression estimates suggest that the likelihood of formal account ownership is highest for individuals between ages 25 and 35, while formal saving and formal borrowing is most prevalent for those between ages 35 and 65. In relation, we find that the key barriers to opening a bank account in these Southeast Asian countries include costs, bank proximity, lack of trust in financial institutions, and individuals’ inability to complete required documentation. Younger individuals and middle-income individuals are more hesitant to open a formal account if a family member has an account already. Policy interventions targeted at breaking down some of these barriers and widening access to finance would boost growth and inclusion in developing countries.

The Modeling of the Probable Behaviour of Insider Cyber Fraudsters in Banks

Insider cyber fraud in the banking sector is a serious and complex issue for financial institutions. This form of cyber fraud is particularly insidious due to insiders’ inherent access and knowledge, necessitating banks to implement comprehensive strategies for detecting, preventing, and responding to these internal threats. The aim of this study is to develop a scientific and methodological approach to model the probable behaviour of insider cyber fraudsters in banks based on a complex combination of principal component analysis, k-means clustering, and associative analysis. During the analysis of current challenges in the financial sector regarding the evolution of cyber fraud and its implications, the systematization of existing theoretical approaches concerning the examination of cyber fraud in banks was performed. Its result revealed a positive trend in the dynamics of the number of published materials in conferences and articles using keywords “cyber” and “frauds” in the Scopus database from 2000 to 2023. Additionally, utilizing the VOSviewer software facilitated the systematization of keyword combinations used in scholarly publications on the chosen topic, forming clusters to visualize and organize vectors of scientific research. Analytical data from Google Trends on critical issues related to cyber fraud were chosen as input data. Twenty variables were formed, which are the results of search queries, characterizing cyberattacks and decreased trust in financial institutions. The principal components method was used to reduce the dimensionality of the input data array, making it possible to select the nine most significant for the study. Conducting a cluster analysis using the k-means method made it possible to form 3 main groups of search queries, which included 12 of the selected variables. The results of the performed procedures contributed to the implementation of associative analysis for three sets of variables. It has been found that what intrigues potential insider cybercriminals in banks the most is the personal financial information of the client, access to the client’s profile in online banking and gaining access to his phone data. The obtained results can be utilized by commercial banks for identifying potential insider cyber fraudsters and ensuring a higher level of client protection against the actions of insider cyber fraudsters, by bank clients for analysing and mitigating potential threats from insider cyber fraudsters, and by law enforcement agencies for prompt responses to potential threats posed by insider cyber fraudsters in banks.

Corporate culture of financial institutions: current problems, challenges, and necessary transformations

The global financial crisis and subsequent upheavals in the national banking systems of many countries, including Ukraine, demonstrated the obvious imperfection of the modern understanding of the essence, components, and role of corporate culture. Corporate culture, as well as the corporate social responsibility of financial institutions, lacks a legal component. Corporate codes formally declare a number of moral and ethical principles, values, but do not include provisions on the need for financial institutions to comply with the norms of international law and state laws. Corporate culture in this form, as well as corporate social responsibility, mostly perceived as a certain analogue of charity, plays an important part in promoting the image and strengthening the positive reputation of financial institutions. However, they do not contribute to the awareness of responsibility for compliance with laws as the foundation of corporate culture, corporate social responsibility in the activity of business structures in the financial sector.
 As the main causes of global financial crises and those in national banking systems, lawyers and researchers of corporate culture named corporate dishonesty, violation of legal norms by banks, respectively, improper management. Such corporate culture, which lacks a legal component, does not fulfill the role of a legal regulatory mechanism, was called "defective." It not only does not draw a clear line between legal and illegal activities of financial institutions and allows financial manipulation but also does not perform the main functions of strengthening a positive reputation and increasing trust in financial institutions and the financial sector as a whole. Moreover, in the conditions of a crisis, it destroys this trust.
 The article examines the main approaches to expanding the interpretation and components of the corporate culture of financial institutions, substantiates the need for its transformation in the direction of introducing the legal component as the basis of corporate culture and responsibility.

Comparative Analysis of Trust in Financial Institutions Across four Provinces in Pakistan

Trust in financial institutions (ToF) is considered essential for an effective financial system, yet, little has been explored regarding what determines them, particularly in the case of Pakistan. By using World Values Survey data (wave 7), large cross-provincial differences are observed for the trust on banks, which confirmed the influence of several socio-demographic indicators. The findings indicate that men tend to trust banks more than women in most cases and trust in banks tends to increase with income, but not in every province. However, it decreases with age in provinces like Balochistan, and media and internet access bring novel results for the trust in financial institutions. Additionally, trusting religious and political institutions, such as trust in government or civil wars, and economic values may affect the trust in financial institutions too. Therefore, the current study suggests to policymakers that a uniform strategy may not work equally well in boosting trust in financial institutions (ToF) across all provinces of Pakistan. However, media literacy and financial education can be prioritized, particularly in areas with lower educational attainment, which could be instrumental in fostering confidence in banks.

Fear and trust in financial institutions

Financial institutions are pillars of the economy and play an important role in consumers’ daily lives. As such, trust between financial institutions and the consumers they serve is of paramount impor- tance. Using an online survey administered during the COVID-19 pandemic, this paper uses a qualitative content analysis methodology to explore consumer fear and trust in financial institutions. Stemming from fear of loss, three themes emerged: (1) history and experience, (2) perceived unfair practices/lack of knowledge of banking, and (3) general trust issues. Implications for financial institu- tions are presented based on these results.

Barriers to Financial Inclusion in Indonesia: A Mixed-Methods Study on Low-Income Households

Lack of trust in financial institutions is a multi-layered issue shaped by individual experiences, community narratives, systemic factors, and the broader social and cultural milieu. It poses a significant barrier to financial inclusion, as trust is the foundation upon which all financial transactions are built. This study provides an in-depth analysis of the factors affecting financial inclusion among low-income households in Indonesia. Employing a mixed-methods approach, the research combines quantitative data from 241 res-pondents with qualitative insights gathered through in-depth interviews. The study finds that education level is significantly correlated with financial inclusion, confirming its critical role as an individual-level factor. Additionally, while geographic proximity to financial institutions does not guarantee higher financial inclu-sion, other accessibility issues such as complex banking procedures and unreliable internet connectivity act as barriers. Cultural norms and lack of trust in financial institutions also emerge as significant hindrances. The findings call for a multifaceted approach to improve financial inclusion, emphasizing the importance of education, refinement of service accessibility, and building community trust.

Assessing the effectiveness of the state information policy of the Russian Federation in the field of increasing the level of trust in financial institutions: regional aspect

This article is dedicated to elaboration and testing of a methodology for assessing the effectiveness of state information policy in the field of increasing the level of public trust in financial institutions at the regional level. Based on the practice-oriented concept of state information policy in the field of increasing public confidence in financial institutions, the main theoretical principles and criteria were analyzed. A system of indicators to assess the effectiveness of this state information policy at the regional level was also presented. The conducted cluster and correlation analysis of the regions of the Central Federal District made it possible to rank them according to the level of socio-economic well-being, which allowed us to identify the Lipetsk, Ryazan and Moscow regions as objects for further testing of the elaborated methodology. In the proposed methodology, effectiveness assessment indicators were grouped into four blocks: 1) strategic planning and programming; 2) methodological and personnel support; 3) implementation of information policy; 4) effectiveness of government programs. The application of a methodology for assessing the effectiveness of state information policy measures in the field of increasing public confidence in financial institutions in the regions showed its average level in all three regions we selected. It was concluded that regions should more flexibly and effectively distribute their activities across all components and stages of the implementation of information policy, from planning (including long-term planning) for the implementation of these functions, to organizing monitoring of the effectiveness of ongoing activities.

Behavioral Patterns That Influence the Financing Choice Models of Small Enterprises in Ecuador through Latent Class Analysis

The presence of small enterprises in developing countries makes new information on these enterprises substantially valuable for these countries. Governments have put forward numerous action plans and public policies to improve access to external credit. However, despite all technological advances, there are still situations linked to the theory of asymmetric information between lenders and borrowers, which influences the granting of financing. Under this premise, the present research uses latent classes to analyze the financing decision behavior patterns of 1033 business owners who faced the financing process and the constraints faced by lenders based on the asymmetric information theory. The results allowed the construction of a model that identified five profiles of trust in financial institutions among entrepreneurs that affected their financing decisions.

Trust in Financial Institutions and Demand for Financial Advice

This article examines the effect of financial trust on the demand for financial advice in Singapore. Using a general population sample, we study how consumers’ trust in financial institutions impacts both their advice-seeking and advice-adopting behaviors. Only 4 in 10 respondents state that they usually seek (or adopt) advice from a financial advisor before investing their savings. We find that financial trust is a strong predictor of both behavioral outcomes, even after accounting for endogeneity and a number of covariates. Furthermore, the estimated effect of financial trust on adopt advice is larger than that on seek advice. These results are robust to variations in empirical specifications. Results also reveal that education is positively associated with the demand for financial advice, while ethnic minorities are less inclined to seek or adopt professional advice. Our findings underscore the importance of enhancing consumers’ trust in financial institutions as a means to further develop the financial services sector and financial advice markets.

On Bitcoin: A Study in Applied Metaphysics

AbstractThis essay is dedicated to the memory of Katherine Hawley.1Bitcoin was invented to serve as a digital currency that demands no trust in financial institutions, such as commercial and central banks. This paper discusses metaphysical aspects of bitcoin, in particular the view that bitcoin is socially constructed, non-concrete, and genuinely exists. If bitcoin is socially constructed, then one may worry that this reintroduces trust in the communities responsible for the social construction. Although we may have to rely on certain communities, I argue that social construction doesn’t imply a demand for trust because the relevant communities don’t take on any relevant commitments. Bitcoin is indeed trust-free.

Do trust in financial institution and financial literacy enhances intention to participate in stock market among Indian investors during COVID-19 pandemic?

This research aims to investigate the significance of trust in financial institution and financial literacy in the investment decision-making of individual investors during the COVID-19 pandemic and investigates the strength of the theory of planned behavior (TPB) in this framework. This study considered a structured questionnaire to collect data from 460 individual investors of different districts in four states of India. For testing the research hypotheses, SPSS and PLS-SEM were taken into consideration. The findings enlighten that elements of TPB, i.e. attitude (ATT) and subjective norms (SNs), are significantly associated with investment intentions (INT) while perceived behavioral control (PBC) displays an insignificant association with INT. Furthermore, along with the original components of the TPB model, Trust in financial institution (TFI) and Financial Literacy (FL) were also incorporated in the model, which shows a significant affect on investors’ intention to invest in the stock market. The results stated that TFI is the most significant factor that enhances investors’ intention to participate in stock market during COVID-19 pandemic. The study describes that during the phase of uncertainty like COVID-19 pandemic trust is the most important factor that enhances investors’ participation in the stock market. Authors suggest SEBI and other financial institutions should promote trust and trusting behavior in financial institutions as it is significant not only from the perspective of financial development but also to empower the individuals to gain from institutional services as well as to guard them, from possible negative effects (like financial frauds), which are more likely to be present outside of regulatory boundaries. This study is one of the initial attempts in the context of the Indian Stock Market to introduce TFI as a dual (both mediating and moderating) variable between the basic constructs of TPB. Further, the study also examines the importance of trust in financial institution and financial literacy in enhancing investors’ intention to participate in stock market during COVID-19 pandemic.

Financial inclusion demand-side determinants: analysis from Egypt

PurposeMost research studies have examined financial inclusion from a supply-side perspective, which measures access and usage of formal financial services by banking outreach indicators, the number of borrowers and the availability of other financial services in a given area. However, this approach is often insufficient to nuance the degree of financial exclusion faced by segments of the population. This study's overall objective is to empirically examine demand-side determinants of financial inclusion.Design/methodology/approachThis research examines the impact of these variables on the level to which an individual is financially included. Notably, the metric employed goes beyond the basic ownership of a bank account and measures the usage of financial services rather than just access. Quantitative data were collected through self-administered surveys targeting 456 individuals in Egypt in order to test the proposed hypotheses. Three different econometric models were tested using regression analysis.FindingsThe findings imply an insignificant relationship between financial literacy and financial inclusion. Results suggest that financial exclusion is associated with low trust in financial institutions, low-income level, low education level and being elderly, with a more substantial influence on income and education.Originality/valueEgypt suffers from a lack of up-to-date demand-side data and data available at hand allow us to know very little about the factors underpinning financial inclusion. This study is contributing demand-side, up-to-date primary data, that provides multiple insights for Egypt regarding the subject, which helps provide answers and suggestions to policy implications.

Banking on cultural change: individual accountability in the financial services sector in Ireland

ABSTRACT Modelled on the Senior Managers and Certification Regime (SMCR) in the UK, the new individual accountability framework (IAF) in Ireland aims to drive positive cultural change and restore trust in financial institutions. This article analyses the potential strengths and weaknesses of the IAF and explores how it might achieve its aim of improving behaviours and culture. Whilst sanctioning individuals to deter future misconduct is an important part of any successful regulatory strategy, it is argued that the focus should be on ensuring that individuals in the financial services industry internalise the norms of behaviour expected under the new IAF. This article is relevant to audiences in various jurisdictions, including the UK and Australia, which operate comparable individual accountability regimes. In particular, it is relevant to researchers and policy-makers in the UK, in light of the Call for Evidence from HM Treasury ‘to consider future reforms to the regime’.

Financial Exclusion in Morocco: Environmental Impact and Explanation through the application of Grounded Theory

With the establishment of the national strategy for financial inclusion in 2015, Morocco launched a challenge to the promote access and use of basic financial products and services such as opening a bank account, savings and insurance while dealing with the various factors and obstacles contributing to financial exclusion. The objective of this paper is to explain the factors of financial exclusion in Morocco and their impact on the environment. To achieve this objective, we have adopted a method based on the application of grounded theory while making a study that is both qualitative and quantitative through a questionnaire and semi-structured interviews conducted on the Moroccan population aged 18 years and above for a period of two months (April and May 2023) using data processing software such as SPSS and N’vivo. The results show that there are several factors that lead to financial exclusion, mainly : lack of trust in financial institutions, low level of education and financial knowledge, lack of financial products and services adapted to the needs of individuals and companies such as loans granted to finance environmental protection projects. To reduce and curb these obstacles, it is recommended to develop financial education programs, and to strengthen the transparency and accountability of financial intuitions.

ЦИФРОВА ФІНАНСОВА ІНКЛЮЗІЯ ДЛЯ ПРИСКОРЕННЯ ДОСЯГНЕННЯ ЦІЛЕЙ СТАЛОГО РОЗВИТКУ

The content, direction, and main components of digital financial inclusion are determined to accelerate the achievement of the Sustainable Development Goals in the conditions of the post-war recovery of Ukraine. Based on the use of the World Bank database, which contains the results of representative surveys at the level of household finances, a quantitative assessment of the level of digital financial inclusion in the main directions of basic financial services of adults in Ukraine compared to other world countries was carried out. According to the results of the research, the authors justify the conclusion that the digital financial infrastructure and the level of digital financial services in Ukraine remain relatively low compared to European countries and middle-income economies. It has been identified the reasons for the "financial exclusion" of the population of Ukraine from the system of formal financial services. It was concluded that the transition to the "cashless economy" model in Ukraine is slowing down due to barriers. The main barriers limiting the access of the population of Ukraine to formal financial services are underdevelopment of the financial infrastructure, forced exclusion of a part of the population from financial services, not enough money of a large number of consumers, lack of trust in financial institutions, high level of the shadow economy in Ukraine and others. The results of the study contain recommendations to overcome existing barriers to expand the population's digital access to basic financial services in Ukraine. The issue of recognizing free access to the Internet as a fundamental right of every person – a digital right – has been updated.

ДОСЛІДЖЕННЯ ЗМІНИ ПРОФІЛЮ ОПЕРАЦІЙНИХ РИЗИКІВ БАНКІВ

The scientific article is devoted to the research and analysis of operational risk issues in modern conditions. The article examines the emergence of the concept of «operational risk» and its transformation under the influence of evolutionary processes and changes. Due to rapid technological advancements and changes in the socio-economic environment, the profile of operational risks for banks has also undergone significant changes. The identification and analysis of factors that have the greatest impact on qualitative and quantitative changes in the profile of operational risks are important tasks for financial institutions. One of the main drivers of changes in risk profiles is the process of digitization in the banking industry. The use of modern information and communication technologies in the banking sector significantly facilitates operations but also leads to new types of risks such as technological failures, cyber-attacks, and theft of confidential information. Another factor that significantly influences the profile of operational risks is the COVID-19 pandemic. The global pandemic has posed a major challenge to the banking sector as it has resulted in significant changes in the way banking services are provided, leading to the emergence of new operational risks. In particular, the implementation of quarantine restrictions and the transition to remote work have prompted banks to review their operational procedures and ways of interacting with clients. This has increased the risk associated with technological flaws, inadequate cybersecurity, and data storage problems. Additionally, the deployment of full-scale warfare caused by military aggression from Russia has a serious impact on operational risk. In such circumstances, banks face significant difficulties in ensuring the security of their assets, carrying out operations, and ensuring the normal functioning of the financial system as a whole. The military conflict has led to instability in the economic environment, a significant decrease in trust in financial institutions, and threats to the solvency of banks. In light of the growing threats of operational risk, the question of improving methods and tools for managing it becomes even more relevant. Banks need to carefully analyze their operational processes, identify potential risks, and develop effective strategies to minimize these risks.

Taking Stock of Policies, Regulations, and Initiatives That Leverage Technology to Build Trust: Lessons from Ghana's Financial Sector.

Technological innovations that increase trust in the financial sector can drive financial growth. Using Ghana as a case study, this study reviewed technology-focused policies, strategy documents, and peer-reviewed literature to assess how financial technology is being utilized to build trust in financial institutions. The literature search revealed that two categories of technological applications are being used to build trust: payment platforms and trade and investment technologies. The findings showed that Ghana has adopted wide-ranging initiatives to build trust-for example, the National Digital Property Addressing System, the Re-registration of SIM Cards, and the passage of the Data Protection Act (Act 843 of 2012). We also identified key challenges associated with leveraging technologies in the sector. Valuable for financial institutions, academics, practitioners, and other financial-sector actors, the insights from this study could enhance policy formulation and implementation across other jurisdictions.