Trust and the quality of formal institutions

Abstract

Motivation: Trust plays an important role in the functioning of individuals at every level and research confirms that it is linked to economic development. As the levels of trust differ across the countries it is crucial to explore the reasons for such variation and to identify determinants of trust. Trust is often used in research to operationalise informal institutions, however, it can also reflect the quality of formal institutions. Therefore, it is vital to investigate whether trust is to a large extent a deeply rooted attitude, which does not lend itself to intentional shaping or it can be generated by better institutional performance. It remains unclear how institutional performance influences trust, there are many doubts concerning for example the diversion of this relation. The evidence on the relationships between generalised and institutional trust also persists mixed. Aim: The paper aims to investigate the relationship between generalised and institutional trust with the quality of formal institutions. Results: The research confirms the positive relationship between generalised and institutional trust for the total group of 22 European countries. Similarly, higher levels of both kinds of trust are related to better institutional performance. However, when the countries are analysed separately as capitalist and post-socialist, the results differ. The aforementioned relationships are confirmed for capitalist countries. Post-socialist countries are characterized by a lower level of trust and lower quality of institutions. Nevertheless, for this group, there is no evidence for the relationship between generalised and institutional trust, and only partial evidence for the relationship between institutional trust and institutional performance. The results support the concepts underlining the influence of institutions’ quality on trust but some observations are inclined to concepts suggesting that trust is culturally determined and regardless of institutional performance decades are needed for its development.