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Choices of savings options related to trust in banks’ competence, benevolence and stability

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Abstract

The study investigates whether beliefs in professional investor skill in conjunction with trust in banks and other fund managers explain choices of options for long-term savings. From questionnaire data obtained for a population-based sample (n=178) and a sample of undergraduates (n=186), two index measures were constructed, one of beliefs in the skill of professional investors and another of trust in fund managers. The trust index was aggregated for the three interrelated components: competence, benevolence and stability. Regression analyses of the likelihood of savings in an actively managed fund showed an expected effect of investor-skill beliefs that was mediated by trust in the fund manager. In addition, self-reported knowledge played a larger role than trust for choices of passively managed index funds and in particular for own investment in stocks.

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Acknowledgements

This research was supported by grant #B4333454/10 from the Foundation for Economic Research in Western Sweden and grant #2010-02449 from the Swedish Agency for Innovation Systems (Vinnova) to the Centre for Finance, School of Business, Economics, and Law, University of Gothenburg, Göteborg, Sweden.

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Correspondence to Amelie Gamble.

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2was an advanced undergraduate student and Research Assistant at the time of the study.

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Carlander, A., Peterson, D., Gamble, A. et al. Choices of savings options related to trust in banks’ competence, benevolence and stability. J Financ Serv Mark 18, 121–136 (2013). https://doi.org/10.1057/fsm.2013.9

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  • DOI: https://doi.org/10.1057/fsm.2013.9

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