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While many symptoms of the recession have begun to improve, a Wharton study indicates that distrust in banks may be an obstacle to further recovery.

The study, conducted by professor Justin Wolfers and assistant professor Betsey Stevenson, analyzed international polling data compiled by the Gallup news organization. It found that after the financial crisis, the number of Americans professing faith in financial institutions fell from 75 percent to 45 percent.

The data likewise indicated that trust in the government is at an all-time low, further complicating recovery efforts.

“Many economists — myself included — have long been worried that today’s recession can ruin tomorrow’s recovery,” Wolfers wrote in the Freakonomics blog earlier this month.

Harsh criticism from politicians and the media alike have played a large role in shaking people’s confidence in the financial system, according to Operations and Information Management professor Maurice Schweitzer.

He believes that increased transparency and humility can help restore popular faith in banks, which he said is critical to the success of the economy as a whole.

“We need this backbone for our economy,” Schweitzer said. “It can’t work without a very strong financial system. I think it’s both necessary and possible for the banks to regain trust.”

Still, pay inequities and past regulatory failures make restoring faith a challenging task, OPIM assistant professor Katherine Milkman said. An additional barrier to restoring trust is the fact that the public only sees when regulatory systems fail, she added.

“If [analysts] predict something right and avoid some disaster, people don’t see that,” Milkman said. “People only see it if they get something wrong.”

Members of Penn’s Financial Literacy Community Project have seen evidence of this distrust in the West Philadelphia classrooms in which they teach.

Earlier this year, College and Wharton sophomores Katie Long and Mimi Sheng founded the FLCP to combat financial illiteracy, which is particularly rampant in low-income areas.

Working in schools, both Long and Sheng have noticed significant distrust in banks.

“There are definitely a lot of conceptions about banks not having the consumers’ best interests at heart and that banks were trying to steal money,” Sheng said.

“Even the elementary schools students have that mistrust, which was particularly shocking to me,” Long added.

While the recession has probably decreased trust further, Long said the distrust has likely been there for generations in the communities where they work.

“I think there’s deep-seated mistrust of banks,” she said. “So instead, they opt for worse financial services, like check-cashing.”

Rebuilding trust will be a twofold process, requiring both regulatory efforts and increased knowledge about the financial system on an individual level, Sheng said.

But while efforts at transparency and education may ameliorate the issue, “perhaps these data provide one more reason to fear that the current malaise may persist,” Wolfers wrote.

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