The (in)effectiveness of financial consumer protection: Quasi-experimental evidence from consumer finance in China
Year: 2024
Type: article
Abstract: The booming consumer finance sector has grappled with internal and external challenges, which call forth strong regulatory responses to financial consumer protection (FCP). Existing studies, however, have explored the economic consequences of FCP from a macro or meso perspective and failed to evaluate the overall effectiveness of the FCP framework. To remedy this, we collected a novel dataset from an online complaint platform in China, which included over 12,000 real-world complaints from March 2019 to September 2022. Built on the dataset, we employ a regression discontinuity in time approach to examine the effect of a representative FCP policy (i.e., Implementation Measures of the People's Bank of China for Protecting Financial Consumers' Rights and Interests ) on the average rating of the consumers' perception of dispute resolution. We confirm the effectiveness of the FCP policy in improving dispute resolution, and the results remain robust for a series of tests. Moreover, the effectiveness of the FCP policy varies in different aspects of perceptions and complaint topics. The heterogeneous analysis demonstrates that first-mover and foreign-shareholding consumer finance companies are more responsive to the Measure . Finally, regulatory punishment and media attention are two channels in which FCP policy benefits consumers' perception of dispute resolution. We further discuss some important policy and managerial implications.
Source: Pacific-Basin Finance Journal
Authors: Yufei Xia, Zhiyin Han, Qiong Zheng, Xiaoli Yang
Institution: Jiangsu Normal University
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $2,820
OpenAlex ID: W4403445479