As Bank of England Chief Economist Andy Haldane1 observes, “Finance is built on trust. It is based on promises about tomorrow, often paper promises backed by nothing other than words on a page. When trust in those promises breaks down, so too does the financial system.”
Kenneth Arrow, the Nobel Prize-winning economist, was among the first to acknowledge the significance of trust in our day-to-day transactions. In 1972 he argued that “…virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time.” Some twenty-years later, in his widely-read 1995 book, Trust: The Social Virtues and the Creation of Prosperity, Francis Fukuyama argued for the significance of social trust in the realm of economic development.
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