Trust in financial system, banks stabilizes
As the economy continued to be a top issue for voters in the final days of the presidential campaign, trust in credit unions remained high at 61 percent among Americans, according to the latest Chicago Booth/Kellogg School Financial Trust Index.
The Index also found that 23 percent of Americans say they trust the country’s financial system. This is an increase of two percentage points since the last issue of the Index in June 2012 and reflects a rebound of trust in the banking sector.
The Index measures public opinion over three-month periods to track changes in Americans’ trust in the private institutions in which they can invest their money, including the stock market, banks, mutual funds, and large corporations. The Index has consistently reported notably more trust in credit unions than local and national banks quarter over quarter since it began in December 2008. This report is the 16th quarterly update and based on a survey conducted in September 2012.
Credit unions are unique because they are not-for-profit, democratically controlled, member-owned cooperatives. Credit unions pool their members’ assets to provide low-cost loans and other financial services in the best interest of the members, not to earn shareholder profits. Credit unions invest their earnings in helping members meet their financial goals.
“Our structure is different than banks allowing us to give consumers a better value,” said Scott Credit Union President & CEO Frank Padak. “We are not-for-profit. All of our members own the credit union and they benefit when we are successful. Our structure is really the best for the consumer.”
The credit union movement’s cooperative spirit is embraced by more than 196 million members served by 51,000 credit unions in 100 countries worldwide, working together to achieve economic progress. Credit unions play a vital role in the economic development and stability of the communities they serve, helping people improve their lives through access to affordable financial services and making the world a better place to live.
Luigi Zingales, co-author of the Financial Trust Index and the Robert R. McCormack Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business, added the gain in the banking sector was largely driven by an increase of trust in national banks in particular, which rose by five percentage points to 28 percent since the last report. Also, trust in community banks remained at 56 percent.
The Financial Trust Index was also developed and spearheaded by Paola Sapienza, Merrill Lynch Capital Markets Research Professor of Finance at the Kellogg School of Management at Northwestern University. Professors Sapienza and Zingales define trust as "an expectation that a person (or institution) will perform actions that are beneficial or at least not detrimental to others. While trust is fundamental to all trade and investment, it is particularly important in financial markets, where people part with their money in exchange for promises."
On a quarterly basis, data is analyzed from more than 1,000 American households, randomly chosen and surveyed via phone by Social Science Research Solutions. In different quarters, this information is supplemented with data on additional topics.
"This is a story we all already knew. Credit unions are trusted," Padak noted. "To have this kind of academic pedigree backing what we knew to be fact, is great."
Scott Credit Union is open to anyone who lives or works in a 17 county area, including Madison, St. Clair, Monroe, Randolph, Perry, Franklin, Jefferson, Washington, Clinton, Marion, Bond, Macoupin, Montgomery, Fayette, Effingham, Williamson, and Jackson counties. Anyone who lives or works in St. Louis County, Missouri also can open accounts at SCU. Additionally, anyone active or retired military also can have accounts withScott Credit Union.
Scott Credit Union currently has 15 area locations: Scott Air Force Base, East Belleville, Fairview Heights, Collinsville, O’Fallon, Edwardsville, Waterloo, Highland, Caseyville, West Belleville, Millstadt, Mascoutah, Troy, East Alton and its Home Office in Edwardsville.
For details on opening accounts at Scott Credit Union, visit www.scu.org, call 1-800-888-4728, or stop by any of the credit union’s branches.
ABOUT THE SURVEY: On a quarterly basis, the Financial Trust Index captures the amount of trust that Americans have in the institutions in which they can invest their money. The survey is conducted by Social Science Research Solutions (SSRS) as part of their weekly national telephone survey, EXCEL. In the most recent wave, a total of 1,011 individuals were surveyed by live interviewers (not IVR) from Sept. 19 to Sept. 26, 2012. The institutions considered in the survey are banks, the stock market, mutual funds and large corporations.
MORE INFORMATION: To learn more about the Chicago Booth/Kellogg School Financial Trust Index visit www.financialtrustindex.org. To arrange an interview, contact Betsy Berger or Allan Friedman at the contact information listed above. To learn more about the Kellogg School of Management at Northwestern University, visit www.kellogg.northwestern.edu. To learn more about the University of Chicago Booth School of Business, visit www.chicagobooth.edu.