Whether in the bank, on the stock exchange or in a fintech company: In the financial sector, interpersonal trust plays a major role. But the most recent scandals – including the Cum-Ex deals and the Wirecard stock market crime – are giving players in the sector an increasingly bad image.
A study by the ECONtribute Markets & Public Policy Cluster of Excellence, jointly operated by the Universities of Cologne and Bonn, and researchers from the University of Mainz and the KU Leuven suggests one possible reason why scandals keep recurring in the financial world. Her research shows: It is above all untrustworthy people who realize a career in the financial industry.
Trustworthiness differs depending on the career aspirations
The experimental long-term study was carried out with students of economics at the University of Frankfurt. During a first survey in 2013, the researchers recorded the career aspirations, social preferences and personality traits of a total of 265 students. They also used a so-called trust game, a computer-aided laboratory experiment, to investigate how trustworthy the test persons are.
The students each received eight euros. They could then decide how much of the money they wanted to give to a second person. Before the second person received the money, the researchers tripled the amount passed on. The second person then had to decide how much of the amount to repay the first person. The higher the amount repaid by the second person to the first person, the more trustworthy it was.
It showed that people’s repayment behavior differed greatly depending on whether they were aiming for a career in the financial world or in another industry. People who expressed little interest in a career in the financial sector returned an average of 24.4 percent of the amount to the first person.
Students who showed a high level of interest in the financial sector returned an average of only 16.6 percent of the amount they received to the first person, while others returned an average of 24.4 percent of the amount. Students who planned their careers in the financial world were altogether 30 percent less trustworthy than those who saw their career entry in another industry after their studies, the authors write.
The financial industry does not filter out less trustworthy people, but instead employs them
In 2019 and 2020, the research team contacted the test subjects again. They wanted to know which of them had actually got a job in the financial world. This again showed a remarkable result.
Among those students who were originally highly motivated to get a job in finance, more people had followed their plan who were significantly less trustworthy than those who had ultimately chosen another industry.
The scientists conclude from this that employers fail to filter out less trustworthy people in their application process. This is particularly relevant as many who are once employed in the financial sector stay there. The study author Matthias Heinz is quoted as saying in a press release from the University of Cologne that “only four percent of employees move from finance to another industry, which makes the selection of employees particularly important”.
The research team encourages further research on recruiting in the financial world and derive implications for politics.