Only one in 10 in Cyprus, Spain confident in financial institutions in 2013
This article is part of a weeklong series focusing on how people worldwide answer some of today's most pressing questions about employment and the economy.
WASHINGTON, D.C. -- Europeans continued to lead the world in their distrust of banks in 2013, with countries hardest hit in Europe's lingering banking and debt crisis topping the list. Confidence in banking sank to a low of 11% in Cyprus and Spain, where residents were the least likely out of 124 countries Gallup surveyed to express trust in their financial institutions.
A few countries -- Ireland, Spain, and Portugal -- have exited from their financial bailouts since the 2013 surveys were conducted. However, the findings suggest a widespread lack of public trust in financial institutions that could be difficult for the European Central Bank (ECB) to assuage when it assumes new supervisory responsibilities for eurozone banks this fall. In six European Union countries, a quarter or less expressed confidence in their banks, and in 24 out of the 28 EU member states, confidence was lower than the global average of 60%.
The 26-percentage-point slump in Cypriots' trust in their financial institutions between 2012 and 2013 is hardly surprising. Originally set off by the subprime mortgage crisis in the U.S., the Cyprus financial crisis reached a crescendo in March 2013 following a 10 billion euro bailout led by the ECB and the International Monetary Fund. Unlike previous bailouts in Greece, Ireland, and Spain, Cypriots were particularly shaken by the terms of the bailout agreement, which included a deposit levy, requiring bank depositors to help cover the cost of the bailout. In 2014, confidence recovered modestly to 16%.
Similarly, Spaniards' trust in their banks also sank to the then all-time low of 11% in May 2013 after the Rajoy administration requested European funds to recapitalize its struggling banks in late 2012. Gallup's surveys in Spain in 2014 show this confidence has not improved even though the country has emerged from its bailout, just 9% express trust in their banks this year.
Confidence High in South Asia
On the Indian subcontinent, confidence in the region's financial systems may be a positive indicator for continued economic growth. In 2013, several South Asian countries rate among the world's most confident in financial institutions, including Bhutan (96%), Nepal (86%), Sri Lanka (85%), Bangladesh (85%), and India (77%). Indians' confidence in their financial institutions -- up from 69% in 2012 -- in particular can be viewed as a boost to that country's economic stability amid continuing economic concerns over the past year.
Europeans' low confidence in their banking system does not bode well for the region's recovery, or for financial markets worldwide, particularly with the specter of banking troubles rising again in central and Eastern Europe. From the perspective of European consumers, EU provisions targeting Cypriot depositors could also raise doubts about the security of their savings. Where confidence levels in financial institutions were already low, the prospect that governments could levy taxes on bank accounts to pay for costly bailouts could further erode residents' trust.
Results are based on telephone and face-to-face interviews with 1,000 adults, aged 15 and older, conducted in 124 countries in 2013. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error ranged from a low of ±2.1 percentage points to a high of ±5.6 percentage points. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more complete methodology and specific survey dates, please review Gallup's Country Data Set details.