How to recover trust in the banking industry? A game theory approach to empirical analyses of bank and corporate customer relationships

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 perce...

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