scholarly journals Financial Consumer Protection in the Household Lending Sector : An Assessment of the Korean Experience

2017 ◽  
Vol 2 (No. 2 Oct 2017) ◽  
pp. 15-34
Author(s):  
Man Cho ◽  
Seung Dong You ◽  
Young Man Lee
Keyword(s):  
Consumer Protection ◽  
Financial Stability ◽  
Credit Card ◽  
Service Providers ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Financial Inclusion ◽  
Future Research ◽  
Regulatory Authorities ◽  
Policy Measures

The objective of this paper is to offer a systematic review and assessment of the policy measures adopted to date for financial consumer protection (FCP) in the household lending sector in Korea. In so doing, we focus on the “software” aspects of the policies adopted so far in terms of four particular groups of consumer issues: (1) information provision (by service providers), (2) financial literacy programs, (3) sales practices, and (4) dispute resolution (rules and processes). We also attempt to relate the FCP policies to two broader goals of financial market regulations - financial stability and financial inclusion. Our analyses indicate that; the regulatory authorities in Korea initiated the FCP policies early on, which cover a fairly comprehensive set of policy measures with almost all sub-items of the aforementioned four dimensions being included; some of the FCP policies are driven in large part by the intent of stabilizing the housing and mortgage market rather than protecting financial consumers per se, for which the regulatory authorities should weigh the anticipated benefit in terms of financial stability against the unintended cost in financial inclusion; and the Korean FCP policies tend to focus on the residential mortgage lending sector, which should be extended to other consumer lending products (e.g., credit – or non-collateralized – lending, credit card receivables, and car loans). Though seemingly comprehensive, the FCP policies in Korea should be further refined and enhanced with respect to their effectiveness, for which we discuss a series of future research topics.

scholarly journals Consumer Justice: A Symbol of Economic Prosperity and Social Progressiveness

2016 ◽  
Vol 1 (2) ◽  
pp. 170
Author(s):  
Subir Kumar Roy
Keyword(s):  
Consumer Protection ◽  
Financial Services ◽  
Financial Stability ◽  
Service Providers ◽  
Growth Efficiency ◽  
Safety Standards ◽  
Secondary Sources ◽  
Goods And Services ◽  
The People ◽  
Bargaining Position

It is well recognized fact that consumer confidence and trust in a well functioning market for financial services promotes financial stability, growth efficiency and innovation over the long term. So protection of the interest of consumers is not merely an ethical or humanitarian issue rather it is also an issue of economy. Consumer protection demands for setting of minimum quality specification and safety standards for goods and services to curb unfair trade practices. So far the international norms are concerned it effectively contains the Bill of Rights of Consumers which help them across the globe to effectively protect their interests. Keeping in consideration about the poor bargaining position of the consumers and with an aim to ensure consumers to access non-hazardous products United Nation issued Guidelines for Consumer Protection, 1985, expanded again in 1999. The consumer justice is a facet of socio-economic justice and emanates from the basic philosophy of the Indian constitution i.e. to do justice and to strengthen the standard and status of the people of this country. It has been discussed in this article in an elaborate way about the various provisions of the Constitution and all the legislations which addresses the issues of consumers and resolve to protect their interests. But still the exploitation of Indian consumers by the dishonest traders and service providers become a routine matter and this article also scanned the reasons for the same and also provides suggestions to ameliorate the conditions of consumers. This paper is based on qualitative analysis of the information mainly obtained from secondary sources such as different books and journals as referred over here, Policy documents, existing laws, reports of United Nations, important judgments and observations of Judiciary etc.

scholarly journals Welfare Implications of Credit Rationing for Financial Consumers: An Empirical Investigation on the Case of the Korean Residential Mortgage Sector

2020 ◽  
Vol 5 (No. 1 Apr 2020) ◽  
pp. 13-24 ◽  
Author(s):  
Soojin Park ◽  
Man Cho
Keyword(s):  
Financial Stability ◽  
Choice Model ◽  
Credit Rationing ◽  
Borrowing Constraints ◽  
Mortgage Lending ◽  
Financial Inclusion ◽  
Policy Implications ◽  
Negative Effects ◽  
Household Level ◽  
Residential Mortgage

Credit rationing through borrowing constraints has long been an important research topic in the literature, in the context of managing financial risks (i.e., financial stability) as well as of expanding financial service to more marginal borrower segments (i.e., financial inclusion). This study empirically investigates the role of borrowing constraints in the residential mortgage lending sector in Korea, by utilizing a discrete tenure choice model to test the constraining effects of two particular lending restrictions on households’ home owning decisions - the wealth and income constraints as measured by the maximum loan-to-value (LTV) ratio and that of debt-to-income (DTI) ratio. Using the household-level micro data from Korea, we report that: the lending restrictions exhibit negative effects on the propensity to own; those constraining effects are also shown to increase for younger borrower cohorts; and, the magnitude of the effect of wealth constraint is larger than that of the income constraint, which is consistent with the findings from the prior studies. Using the empirical findings, we discuss policy implications of relevancy, in particular, as to how to balance between two often competing policy objectives - ensuring financial stability and extending financial inclusion - in the context of the residential mortgage lending sector in Korea.

scholarly journals MORTGAGE LENDING AND FINANCIAL STABILITY IN ASIA

2018 ◽  
Vol 63 (01) ◽  
pp. 125-146
Author(s):  
PETER J. MORGAN ◽  
YAN ZHANG
Keyword(s):  
Financial Stability ◽  
Mortgage Lending ◽  
Expected Improvement ◽  
Probability Of Default ◽  
Z Score ◽  
Macroprudential Policy ◽  
Two Measures ◽  
Policy Measures ◽  
Negative Impacts ◽  
The Impact

We estimated the effect of the share of mortgage lending by individual banks (together with some control variables) on two measures of financial stability — the bank Z-score and the non-performing loan ratio — for a sample of 397 banks in 19 emerging Asian economies for the period 2003–2014 from the Bankscope database. We find evidence that an increased share of mortgage lending is positive for financial stability, specifically by lowering the probability of default by financial institutions and reducing the non-performing loan ratio, at least in non-crisis periods, for levels of mortgage shares up to 23–65%. For higher levels of mortgage lending shares, there is some evidence that the impact on financial stability turns negative. We also find that the share of mortgage lending can be a useful measure of both financial development and financial inclusion. This finding most likely reflects the effect of a higher share of mortgage lending in diversifying the mix of banks’ assets and thereby reducing overall risk. However, if the share of mortgage lending is too high, then the diversification effect diminishes. Therefore, the challenge is to balance the expected improvement in financial stability due to asset diversification against negative impacts that might result from easier lending standards or too rapid increases in mortgage lending that could trigger a bubble in the housing market. This highlights the need for prudent monetary policy and macroprudential policy measures to forestall the development of such bubbles.

New Mortgage Lenders and the Housing Market*

2020 ◽  
Author(s):  
Nikodem Szumilo
Keyword(s):  
Risk Taking ◽  
Financial Stability ◽  
House Prices ◽  
Housing Prices ◽  
Real Estate Market ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
The Real Estate ◽  
Banking Market ◽  
The Real Estate Market

Abstract This article examines the effect of a new lender’s entry into a local mortgage market on the supply of new loans, housing prices and repossessions in areas around its branches. I use the decision of the European Commission to force the UK’s largest retail bank to divest a part of its business as a shock to the entry of a new lender, and show that incumbent banks increase mortgage lending in areas where the new bank has its branches. Furthermore, house prices increase by around 5% in the real estate market impacted by the shock. Average transaction numbers and mortgage repossession rates also increase in places where the new bank enters. Overall, my results show that increased competition in the banking market can have adverse consequences for risk-taking and financial stability.

scholarly journals Consumer Justice: A Symbol of Economic Prosperity and Social Progressiveness

2016 ◽  
Vol 1 (2) ◽  
pp. 170 ◽  
Author(s):  
Subir Kumar Roy
Keyword(s):  
Consumer Protection ◽  
Financial Services ◽  
Financial Stability ◽  
Service Providers ◽  
Growth Efficiency ◽  
Safety Standards ◽  
Secondary Sources ◽  
Goods And Services ◽  
The People ◽  
Bargaining Position

It is well recognized fact that consumer confidence and trust in a well functioning market for financial services promotes financial stability, growth efficiency and innovation over the long term. So protection of the interest of consumers is not merely an ethical or humanitarian issue rather it is also an issue of economy. Consumer protection demands for setting of minimum quality specification and safety standards for goods and services to curb unfair trade practices. So far the international norms are concerned it effectively contains the Bill of Rights of Consumers which help them across the globe to effectively protect their interests. Keeping in consideration about the poor bargaining position of the consumers and with an aim to ensure consumers to access non-hazardous products United Nation issued Guidelines for Consumer Protection, 1985, expanded again in 1999. The consumer justice is a facet of socio-economic justice and emanates from the basic philosophy of the Indian constitution i.e. to do justice and to strengthen the standard and status of the people of this country. It has been discussed in this article in an elaborate way about the various provisions of the Constitution and all the legislations which addresses the issues of consumers and resolve to protect their interests. But still the exploitation of Indian consumers by the dishonest traders and service providers become a routine matter and this article also scanned the reasons for the same and also provides suggestions to ameliorate the conditions of consumers. This paper is based on qualitative analysis of the information mainly obtained from secondary sources such as different books and journals as referred over here, Policy documents, existing laws, reports of United Nations, important judgments and observations of Judiciary etc.

scholarly journals (The Role of Financial Inclusion in Providing Protection to Beneficiaries of Financial Services in the Palestinian Banking Sector (2013/2017: دور الشمول المالي في توفير الحماية للمستفيدين من الخدمات المالية في القطاع المصرفي الفلسطيني- الفترة (2013- 2017)

2019 ◽  
Vol 3 (6) ◽  
Author(s):  
Yasser Ahmed Shaheen
Keyword(s):  
Consumer Protection ◽  
Financial Services ◽  
Financial Stability ◽  
Banking Sector ◽  
Secondary Data ◽  
Financial Education ◽  
Financial Inclusion ◽  
Banking Services ◽  
Degree Of Protection

  The study aimed at examining some of the indicators of financial inclusion in the Palestinian banking sector through published secondary data on the Palestinian banking sector during the period (2013- 2017), as well as to measure the degree of protection for beneficiaries of financial services in the Palestinian banking sector. The researcher used the descriptive analytical method to suit the purposes of the study. The secondary data published and prepared by the researcher were used to examine the state of financial coverage in the banking sector. A questionnaire has been designed for the purpose of collecting preliminary data regarding the level of protection provided by the banking sector to users of financial banking services through 8 areas of protection developed after reference to literature and previous studies. The study population consisted of all the beneficiaries of banking financial services in the West Bank. In view of the large size of the study society, a soft sample of (100) conditional on the characteristics of the respondents was used in terms of (banking culture, years of experience in dealing with banks, Sectoral& banking diversification).The researcher reached the following results: - The Palestinian banking sector promotes the reality of financial inclusion, which contributes significantly to enhancing financial stability. Where banks are strengthening protection for users of banking services, although the level of protection was average (2.78) overall score through the eight areas covered by the study. - The regulatory and supervisory role of the Palestinian Monetary Authority in this important sector was medium. Consumer protection bodies are required to have an active and proactive role to organize the required protection. The researcher recommended the importance of financial education to improve the financial personality of individuals and institutions, help them understand their rights and duties in dealing with the services discharged, the importance of the consumer protection associations roles in enhancing banking protection.    

Financial Inclusion and Stability: Review of Theoretical and Empirical Links

2020 ◽  
Author(s):  
Martin Čihák ◽  
Davide Salvatore Mare ◽  
Martin Melecky
Keyword(s):  
Financial Stability ◽  
Financial Inclusion ◽  
Future Research ◽  
Financial Policy ◽  
Data Sets ◽  
Empirical Correlations ◽  
Knowledge Gaps ◽  
Financial Instrument ◽  
Stability Measure ◽  
Positive Correlations

Abstract This paper reviews the literature on financial stability and financial inclusion—two broad objectives of financial policy that may be mutually dependent. The review suggests the possible co-dependence of stability and inclusion. We build on this theoretical motivation by exploring stylized facts (correlations) obtained from data sets that have been widely used in the literature on financial inclusion and stability. The empirical correlations suggest that, on average, financial inclusion and stability correlate negatively, but the correlations vary systematically across individuals, firms, and country contexts. Depending on the financial instrument and stability measure, positive correlations are also likely. These associations reflect some findings in the existing literature, but also point to knowledge gaps that can be addressed by future research.

scholarly journals The Rise of Digital Money

FinTech Notes ◽  
2019 ◽  
Vol 19 (01) ◽  
Author(s):  
Tobias Adrian ◽  
Tommaso Mancini Griffoli
Keyword(s):  
Consumer Protection ◽  
Financial Stability ◽  
Credit Card ◽  
Global Economy ◽  
Regulatory Issues ◽  
Monetary Value ◽  
Bank Deposits ◽  
Digital Money ◽  
Illegal Activities ◽  
Insight Into

This paper marks the launch of a new IMF series, Fintech Notes. Building on years of IMF staff work, it will explore pressing topics in the digital economy and be issued periodically. The series will carry work by IMF staff and will seek to provide insight into the intersection of technology and the global economy. The Rise of Digital Money analyses how technology companies are stepping up competition to large banks and credit card companies. Digital forms of money are increasingly in the wallets of consumers as well as in the minds of policymakers. Cash and bank deposits are battling with so-called e-money, electronically stored monetary value denominated in, and pegged to, a currency like the euro or the dollar. This paper identifies the benefits and risks and highlights regulatory issues that are likely to emerge with a broader adoption of stablecoins. The paper also highlights the risks associated with e-money: potential creation of new monopolies; threats to weaker currencies; concerns about consumer protection and financial stability; and the risk of fostering illegal activities, among others.

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