Determinants of Institutional Trust: A European Cross-Country Evaluation

Abstract: Properly functioning institutions are essential for economic prosperity. However, to be willing to engage in transactions and contribute to the economy, agents must deem them trustworthy. Trust is in itself an abstract and complex concept. There is a large number of competing but not necessarily contradictory theories aiming to explain how institutional trust arises. To better understand what explains cross-country differences in institutional trust, we apply qualitative comparative analysis (QCA) on data from the European Values Study, Transparency International, and the World Bank and propose a revised theoretical framework. Drawing on our empirical findings, we argue that perceived institutional performance is causally linked to trust in institutions. Furthermore, we propose that differences between countries in terms of institutional trust can also be explained independent of institutional performance by considering the social and individual setting.