TRUST RATIONALIZERS AS THE INSTITUTIONAL INFRASTRUCTURE OF FINANCIAL MARKETS: A CONCEPTUAL FRAMEWORK FOR STRUCTURED TRUST ELASTICITY

Abstract

Modern financial markets operate under conditions of increasing information asymmetry, making independent risk assessment increasingly difficult and shifting the process of trust formation toward specialized intermediaries. Despite substantial advances in the literature on financial intermediation and institutional economics, there is still no integrated conceptual framework that brings together the various categories of such intermediaries into a coherent institutional construct while explaining their systemic role in shaping market expectations.This article aims to address this gap by developing the theoretical concept of trust rationalizers, defined as the set of entities and institutions that professionally assess risks, provide information intermediation, or otherwise reduce transaction costs in the process of trust formation in financial markets. Based on a structural-functional analysis, the study identifies the functional groups of trust rationalizers and examines their systemic role in mitigating information asymmetry, structuring market expectations, and influencing trust elasticity, particularly by distinguishing between fundamental changes and informational noise within the information environment.The scientific novelty of the study lies in distinguishing two components of trust elasticity: elasticity with respect to fundamental changes in risk (E_fund) and elasticity with respect to informational noise (E_noise). The paper demonstrates that the effective functioning of trust rationalizers increases the former while reducing the latter, thereby structuring rather than merely amplifying market responses. The practical significance of the findings lies in providing a theoretical foundation for regulatory reforms aimed at strengthening the independence, accountability, and transparency of trust rationalizers. Such reforms are particularly relevant for Ukraine in the context of post-war economic recovery and efforts to enhance the country's investment attractiveness.Drawing on an analysis of the European Union's regulatory approach, the study further demonstrates the need for deeper institutionalization, greater independence, and enhanced accountability of institutions belonging to the category of trust rationalizers. Their effective functioning is shown to constitute one of the key prerequisites for ensuring financial stability.