{"title":"The (in)effectiveness of financial consumer protection: Quasi-experimental evidence from consumer finance in China","authors":"Yufei Xia, Zhiyin Han, Qiong Zheng, Xiaoli Yang","doi":"10.1016/j.pacfin.2024.102563","DOIUrl":null,"url":null,"abstract":"<div><div>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 <em>meso</em> 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., <em>Implementation Measures of the People's Bank of China for Protecting Financial Consumers' Rights and Interests</em>) 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 <em>Measure</em>. 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.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"88 ","pages":"Article 102563"},"PeriodicalIF":4.8000,"publicationDate":"2024-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Pacific-Basin Finance Journal","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0927538X24003159","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
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.
期刊介绍:
The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.