Shaping Confidence in Financial Institutions: A German Survey on the Role of Regulatory Safeguards

In light of financial crises and insolvencies within the financial sector, capital adequacy requirements and guarantee schemes are designed to ensure market stability and to protect customers. However, recent failures such as of Credit Suisse in 2023 or the life insurer FWU in 2024 illustrate that financial institutions remain vulnerable to defaults. Against this backdrop, we surveyed 683 German life insurance policyholders to assess their confidence in banks and life insurers as well as their sector-specific awareness of capital adequacy requirements and guarantee schemes. Our findings reveal that Germans exhibit greater confidence in banks than life insurers, likely due to their limited awareness of regulatory safeguards in the life insurance sector compared to banking. Furthermore, confidence in financial institutions is influenced by overall financial literacy. These results suggest that policymakers should try to enhance financial literacy and raise public awareness about existing regulatory safeguards, particularly in the life insurance sector.