The Role of Trust in Maintaining the Resilience of Financial Markets

Tomasic, Roman; Akinbami, Folarin

doi:10.5235/147359711798110628

The Role of Trust in Maintaining the Resilience of Financial Markets

Tomasic, Roman; Akinbami, Folarin

Authors

Roman Tomasic

Folarin Akinbami

Abstract

The Global Financial Crisis (GFC) threatened to bring world financial markets to a halt. It is now coming to light that in the run-up to, and at the height of, the GFC, investment banks and other participants in the financial markets acted unethically as well as imprudently. This article takes a closer look at this unethical behaviour and the way in which it constitutes a failure of trust. The article defines trust and outlines why it is important in the regulation of financial markets. It then looks at three examples of breakdowns or failures of trust in the run-up to the financial crisis. The article concludes by arguing that trust is important in commercial relationships at both the intra-firm level (the relations between the different constituents of the firm) and the inter-firm level (the relations between the firm and other firms).

Citation

Tomasic, R., & Akinbami, F. (2011). The Role of Trust in Maintaining the Resilience of Financial Markets. Journal of Corporate Law Studies, 11(2), 369-394. https://doi.org/10.5235/147359711798110628

Journal Article Type	Article
Publication Date	Oct 1, 2011
Deposit Date	Oct 18, 2011
Publicly Available Date	Mar 15, 2012
Journal	Journal of Corporate Law Studies
Print ISSN	1473-5970
Publisher	Taylor and Francis Group
Peer Reviewed	Peer Reviewed
Volume	11
Issue	2
Pages	369-394
DOI	https://doi.org/10.5235/147359711798110628
Keywords	Trust, Global Financial Crisis, Progressive corporate law, Financial innovation, Moral hazard, Too big to fail, Creative accounting.