Working Paper: NBER ID: w28262
Authors: Seth Garz; Xavier Gin; Dean Karlan; Rafe Mazer; Caitlin Sanford; Jonathan Zinman
Abstract: Markets for consumer financial services are growing rapidly in low and middle income countries and being transformed by digital technologies and platforms. With growth and change come concerns about protecting consumers from firm exploitation due to imperfect information and contracting as well as from their own decision-making limitations. We seek to bridge regulator and academic perspectives on these underlying sources of harm and five potential problems that can result: high and hidden prices, overindebtedness, post-contract exploitation, fraud, and discrimination. These potential problems span product markets old and new, and could impact micro- and macroeconomies alike. Yet there is little consensus on how to define, diagnose, or treat them. Evidence-based consumer financial protection will require substantial advances in theory and especially empirics, and we outline key areas for future research.
Keywords: consumer financial protection; low and middle income countries; financial inclusion; regulation; consumer harm
JEL Codes: D11; D12; D18; D81; D82; D83; D9; G21; K23; K31; K42; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| product complexity (L15) | consumer harm (D18) |
| cognitive biases (D91) | financial behavior (G53) |
| firm behavior (D21) | consumer outcomes (G52) |
| unethical firm practices (M14) | adverse consumer experiences (D18) |