Trust in finance: Values matter

Abstract

Moralistic trust arises when people believe others share their moral values. I examine whether trust in the finance industry has a moral foundation by comparing values and attitudes of finance professionals with those of the general population in two data sets: a unique data set on values of CFAs in 2016 paired with the World Value Survey, and the European Social Survey. I show that differences in “ethical” values of finance professionals and members of the population are generally smaller in countries where people trust financial institutions more. But as trust increases, these value differences become larger. I show that selection helps reconcile the differences in the cross-sectional and time-series results. In periods of high trust in the finance industry, e.g. the pre-crisis period, finance professionals in the sample are less educated. While many are asked what they think about finance professionals, my results suggest that asking finance professionals what they think can provide insights into how trust evolves with selection into the industry.