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The importance of trust for inter-organizational relationships: A study of interbank market practices in a crisis

Alexander Rad (Department of Business, Law and Economics, Center for Research on Economic Relations, Mid Sweden University, Sundsvall, Sweden)

Qualitative Research in Accounting & Management

ISSN: 1176-6093

Article publication date: 7 August 2017

Abstract

Purpose

This paper aims to examine interbank market practices in a crisis to understand the importance of trust in dealing with control problems and managing risk in inter-organizational relationships (IORs).

Design/methodology/approach

A qualitative field study was conducted to collect data from two case-study banks and two key banking industry institutions.

Findings

The findings illustrate the use of trust-based partner-selection criteria such as guaranteed banks (i.e., banks granted special status by key banking industry institutions) and “clan-related” banks. In addition, the findings present several trust-based performance-control processes regarding the selected counterparties, such as negative expectations, goodwill and information sharing.

Research limitations/implications

This paper highlights IORs and considers how associated control problems and risks are affected by trust in the context of a large-scale crisis.

Practical implications

The findings provide insights into interbank market practices during the global financial crisis with respect to partner selection and performance control.

Originality/value

The empirical case of the banking industry helps broaden our understanding of inter-IORs.

Keywords

Acknowledgements

The author acknowledges foremost the valuable assistance of Gunnar Wahlström in the data collection. Along the research and publication process, Sten Jönsson, Gudrun Baldvinsdottir, Jonny Bergman, the discussant at the Manufacturing Accounting Research Conference 2016 and two anonymous reviewers provided constructive comments and suggestions.

Citation

Rad, A. (2017), "The importance of trust for inter-organizational relationships: A study of interbank market practices in a crisis", Qualitative Research in Accounting & Management, Vol. 14 No. 3, pp. 282-306. https://doi.org/10.1108/QRAM-07-2014-0049

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited