How to recover trust in the banking industry? A game theory approach to empirical analyses of bank and corporate customer relationships
Abstract
Purpose
Trust is a crucial element of a viable banking industry. In the corporate market though, the characteristics of the relationships between each corporate customer and the bank is a double-sided problem. Both parties might trust the other or choose to behave opportunistically. The paper aims to discuss these issues.
Design/methodology/approach
The authors have analyzed the effects of inter-organizational trust and opportunism on the perception of risk. The paper presents a structural equations model based on a prisoner's dilemma logic to analyze the unique effects of trust between corporate customers and their banks and its corporate customers.
Findings
The results based on 252 bank – corporate bank customers relationships reveal an intriguing mixed strategy between trust from one party and opportunism from the other.
Research limitations/implications
The implication is that mutual trust seems to reduce the perception of risk in the market while bank opportunism significantly escalates perceived risk. The analyses also show that when the corporate customer trusts the bank, perceived risk is significantly reduced.
Practical implications
The findings emphasize the role of relationship marketing in the banking industry.
Originality/value
Despite the fact that inter-organizational trust is a crucial dyadic variable, few empirical studies have previously analyzed both sides of the relationship. This investigation is a preliminary analysis of how both sides of the same relationship affects the outcome. When trust erodes from one side of the relationship, it may lead to the same process on the other side of the relationship.
Keywords
Acknowledgements
The authors have contributed equally to this paper. The authors acknowledge the comments and critics from the editor and two anonymous reviewers. The authors also thank Said Azouagh, Thomas Stenshorne, and Kjetil Wæthing for technical assistance during this research. The authors appreciate the support of the fund for bank and finance research at the BI Norwegian Business School, the SUPTEK-program, and The Research Council of Norway.
Citation
Dahlstrom, R., Nygaard, A., Kimasheva, M. and M. Ulvnes, A. (2014), "How to recover trust in the banking industry? A game theory approach to empirical analyses of bank and corporate customer relationships", International Journal of Bank Marketing, Vol. 32 No. 4, pp. 268-278. https://doi.org/10.1108/IJBM-03-2014-0042
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited