Does Trustworthiness Matter for the Actual Lending-Deposit Spread and Perceived Financial Service Affordability?

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Savinee Suriyanrattakorn


Trustworthiness in financial systems is widely recognized as a crucial factor in fostering financial market efficiency. This research delves into the influence of trustworthiness in financial markets on both the perceived and actual costs of the financial system, drawing upon an eleven-year panel (2007-2017) encompassing 136 countries. The data was obtained from the Global Financial Development (GFD) and World Economic Forum Global Competitiveness Index (GCI). The study assesses the cost of financial systems through two key indicators: the bank lending-deposit spread and the perception of affordability in financial services. Additionally, this paper introduces a novel trustworthiness index from the GCI for estimation purposes. Three methodologies - fixed effect model, random effect model, and two-stage procedure - are applied. The findings reveal that trustworthiness shows an insignificant negative relationship with the bank lending-deposit spread. However, trustworthiness in financial systems positively impacts the perception of the cost of financial services across the overall sample, as it aids in cost reduction for financial transactions and enhances the affordability of financial services. As evident, enhancing trustworthiness within financial systems can effectively reduce the perceived cost of financial services. Policymakers should direct their efforts towards fostering trustworthiness in financial systems by implementing measures that prioritize transparency and accountability practices.

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Suriyanrattakorn, S. (2023). Does Trustworthiness Matter for the Actual Lending-Deposit Spread and Perceived Financial Service Affordability?. Asian Journal of Applied Economics, 30(2), 23–37. Retrieved from
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