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The aim of this research is to analyze the determinants of non-bank financial institution efficiency. The non-bank financial industry is one of the main contributors to Indonesia economic growth during the last 15 years. The non-bank financial industry will the consumer finance company industry. The panel data used in this research is from 2001-2016.The non-bank financial industry is also measured as one the fastest raising industries in the last 16 years. Thesixmain financial ratios and related industry alliance impact the determinants of finance companies’ efficiency. The financial ratios are firm size, capital structure, equity, asset ratio, income to total assets and cost to total assets. The empirical results show that the determinants of non-bank financial institution are income to total assets and cost to total assets.

The authors present empirical evidence that borrowers, consciously or not, leave traces of their intentions, circumstances, and personality traits in the text they write when applying for a loan. This textual information has a substantial and significant ability to predict whether borrowers will pay back the loan above and beyond the financial and demographic variables commonly used in models predicting default. The authors use text-mining and machine learning tools to automatically process and analyze the raw text in over 120,000 loan requests from Prosper, an online crowdfunding platform. Including in the predictive model the textual information in the loan significantly helps predict loan default and can have substantial financial implications. The authors find that loan requests written by defaulting borrowers are more likely to include words related to their family, mentions of God, the borrower’s financial and general hardship, pleading lenders for help, and short-term-focused words. The authors further observe that defaulting loan requests are written in a manner consistent with the writing styles of extroverts and liars.

The wealthiest family business owners are recognized as economically powerful, but there is little theoretical underpinning to explain how their behavior differs from their counterparts. To increase our understanding of family firm owners we draw on literature to introduce the concept of the rentier which we contrast with the socioemotional wealth (SEW) perspective of ownership. We test contrasting predictions by examining the strategic behavior of the one percent wealthiest business owning households in the United States using data from Federal Reserve Board’s 2013 Survey of Consumer Finance. Our findings depict an entrepreneurial category of owners who blend aspects of both rentier and SEW modes, but suggest important shortcomings of both perspectives.

We document the economywide extent of misconduct among financial advisers and the associated labor market consequences. Seven percent of advisers have misconduct records, and this share reaches mor...

The effect of regulatory standards regarding the presentation of investment products on financial behavior is poorly understood. In two incentivized online experiments (N = 2,221) we examine the impact of information-based and tool-based guidance on the selection of retirement plan investment funds. Participants chose between funds that followed identical investment strategies but charged different fees. Over multiple trials, participants were instructed to identify the fund which charged the lowest fees given their hypothetical plan balance. Defaults and disclosures were found to be situationally helpful, but highlighted participants' naivete with regard to the calculations underlying the fee structure. Advice tended to be underutilized but was beneficial when sought. Tool-based guidance in the form of a smart calculator had a moderate impact on accuracy but benefits did not persist. Together the results highlight the danger of taking a homogeneous approach to financial guidance and emphasize the need to build consumer competency.

This paper is an evaluation of the common macro-economic, micro-economic, and social factors affecting households’ financial situations. Moreover, the author’s objective was to develop a fuzzy logic model for forecasting fluctuations in the number of nonperforming consumer loans in a country using the example of Poland. This study represents one of the first attempts in the global literature to develop such a forecasting model based on macro-economic factors. The findings confirm the usefulness of the proposed innovative approach to forecasting the volume of household insolvencies in a country.

The chapter aims to determine three research objectives: (1) ATM service quality in Lebanon measurement based on five dimensions, using the SERVQUAL model; (2) analyze and investigate customer satisfaction and loyalty of the ATM usage, during two different periods, before and after the following situations that Lebanon encountered: foreign currency shortage, commercial banks' informal capital control, and bankruptcy; and 3) assess the intention of the Lebanese to adopt Libra virtual currency. To achieve the objectives of the study, a questionnaire was distributed among bank clients in Lebanese. The results and analysis of the study have been done by comparing the means of SERVQUAL dimensions. The findings indicate that the Lebanese perspective of the banking system changed during the two different periods; however, their intention level to adopt a virtual currency is low.

Internet consumer finance is in the midst of the sustainable development of the current situation, this paper focuses on Internet consumer finance influence on rural residents’ consumption in China, Through the analysis of selected data by SPSS software, the empirical study proves that the development of Internet consumer finance can promote the increase of rural residents’ consumption expenditure. but the development of rural Internet consumer finance there are still some problems, thus put forward a series of countermeasures and Suggestions, for the relevant personnel to improve a certain reference and help.

An analysis of the Survey of Consumer Finance shows that wealthy investors have a higher return on their stocks than their poorer counterparts. Three key empirical facts emerge: (i) wealthy investors employ more productive search efforts, (ii) financial risk bearing and search efforts are complementary, and (iii) wealthy investors have a higher risk adjusted return. These facts present a challenge to the “standard” asset pricing theory, which assumes that the return on stocks is uncorrelated with wealth and omits any relationship between search activity and portfolio returns. This study presents a search theoretic model of portfolio choice to understand the relationship between wealth, return, and search behavior.

This report highlights how the design of the main protection meant to deliver affordability to federal student loan borrowers, Income-Driven Repayment (IDR), ignores the widespread effects that runaway student loan balances have across borrowers’ financial lives. Drawing on extensive research, the report shows how IDR’s failure to consider the massive costs and consequences student loan borrowers face turns IDR into a debt trap for millions. The report calls on President Biden to take action to fix IDR by ending the phenomenon of runaway student loan balances for borrowers in IDR and making other key changes.

This chapter sheds light on two advanced technologies related to consumer finance and retail investment. The chapter discusses the importance of mobile bank applications and robo financial advisors as well as loyalty and initial trust among young bank customers and young retail investors, respectively. It also highlights some public statistics from Sweden and Malaysia, two countries representing FinTech hubs, to illustrate the development of FinTech solutions. The chapter emphasises proposals for a continued direction for research.

This paper studies how courts in India have dealt with consumer finance disputes. It presents the organisation of the courts that hear consumer finance cases. It reviews the 60 most cited cases to study the position that courts have taken in banking and insurance disputes. For the cases studied, it finds that courts have generally granted relief to consumers in banking disputes. In the case of insurance, courts have emphasised contractual compliance. This is so even if the contracts themselves were opaque or had unfair terms. The paper also finds that courts award low compensation and take a long time for adjudication. It suggests that courts should put in place systems to facilitate class action suits and bring in specialisation to deal with consumer finance disputes.

There are hosts of dynamics contributing to financial inclusion. These sources may be both from the demand side and supply side. The government and financial institutions use several policy initiatives to encourage the supply of financial services to the excluded sector. However, the demand-side factors of financial access have attracted little focus. This study provides an overview of sources of financial inclusion and highlights the policy measures from the perspective of consumers of financial services – also known as the demand-side. The secondary series data were estimated using the ordinary least square method. The findings of the study indicate that economic growth and the number of internet users exert a positive and significant effect on financial access in East Africa. On the other hand, the result indicates that the deposit interest rate was insignificant. The study recommends the deposit interest rate be made attractive to promote continuous saving and access to loanable funds in the financial market. The policy strategies therefore should be aimed at cultivating a conducive financial system that upholds financial access-demand-driven rates to stimulate financial growth.

This article has teased out Anne Flemings’s interests and the overarching themes in her research. It shows how these themes and interests influenced the direction of her research in the hope that these ideas will continue to be influential in the years to come. Her scholarship tells a compelling story of individual lives, consumerism, and the pitfalls of leaving capitalism unbowed. The significance of Anne’s scholarship is not only owing to her substantive claims but also to her approach. She mapped out elaborate histories of lending, although she primarily assessed consumer finance law and economic policy by looking at their impact on the end user. There is much to be gained by taking such an approach and from using the consumer as a lens to examine banking and financial regulation.

How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households' financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead pipes, experienced a modest increase in the balance and frequency of past due loans. Equifax Risk Scores declined slightly on average, but more so at the bottom of the Risk Score distribution. In addition, we find that there was no effect on mobility out of the state or county, but that more affected households were more likely to move within the city when the crisis began, away from lead-pipe-dense areas.

How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households’ financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead pipes, experienced a modest increase in the balance and frequency of past due loans. Equifax Risk Scores declined slightly on average, but more so at the bottom of the Risk Score distribution. In addition, we find that there was no effect on mobility out of the state or county, but that more affected households were more likely to move within the city when the crisis began, away from lead-pipe-dense areas.

In July 2005, a set of cuts to Medicaid eligibility and coverage went into effect in the state of Missouri. These cuts resulted in the elimination of the Medical Assistance for Workers with Disabilities program, more stringent eligibility requirements, and less generous Medicaid coverage for those who retained their eligibility. Overall, these cuts removed about 100,000 Missourians from the program and reduced the value of the insurance for the remaining enrollees. Using data from the Medical Expenditure Panel Survey, we show how these cuts increased out-of-pocket medical spending for individuals living in Missouri. Using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel (CCP) and employing a border discontinuity differences-in-differences empirical strategy, we show that the Medicaid reform led to increases in both credit card borrowing and debt in third-party collections. When comparing our results with the broader literature on Medicaid and consumer finance, which has generally measured the effects of Medicaid expansions rather than cuts, our results suggest there are important asymmetries in the financial effects of shrinking a public health insurance program when compared with a public health insurance expansion.

Interest includes compensation not only for forbearance (forgoing current income for future income) and risk bearing but also compensation for expenses incurred to originate, service, and collect loans. The latter expenses are largely fixed, not varying much with the amount of credit.

This dissertation addresses many important economic questions surrounding agency problems and vertical incentives. The first chapter documents the institutional background and pricing of U.S. reverse convertible bonds. The primary reason why I look into the reverse convertible bonds market is that it has interesting variation, enabling me to answer research questions in the second chapter and the third chapter. The second chapter shows some suggestive evidence of agency problems and vertical incentives in the reverse convertible bonds market mainly using a reduced-form analysis. Finally, the third chapter estimates the degree of agency problems and the degree of vertical incentives using a structural model. I conclude by analyzing various counterfactual scenarios. The first chapter introduces a financial product called a reverse convertible bond. It documents the product, market structure, and distribution process of the bond. Using a data set on reverse convertible bonds, I calculate the fair value of each bond by which I derive an issuer markup, i.e. how much an issuer earns by issuing each bond. This variable plays a critical role in investigating agency problems and vertical incentive issues in the second and third chapters. I also introduce my second data set on broker firms in this chapter. The second chapter documents some suggestive evidence of agency problems and vertical incentives in the reverse convertible bonds market. Combining two data sets described in the first chapter, I show descriptive evidence of agency problems and vertical incentives which are against the relevant regulations in the market. Specifically, broker behavior indicates agency problems while the relevant regulations such as suitability standard or fiduciary duty prevent them from doing so. In addition, I show that brokers are sensitive to their vertically integrated upstream firm's profit while arms-length transaction laws prohibit them from doing so. The final chapter estimates the degree of agency problems as well as the degree of vertical incentives in the reverse convertible bonds market. Although I show suggestive evidence of agency problems and vertical incentives in the second chapter, it is not straight forward to estimate their severity using a reduced-form analysis. Thus, I introduce a structural model that allows us to estimate the degree of agency problems and the degree of vertical incentives. The estimation results suggest that there are severe levels of both agency problems and vertical incentives in the market. Lastly, the counterfactual analysis shows that there is a substantial consumer surplus loss arising from agency problems. I also document a consumer welfare loss coming from vertical incentives but the magnitude is smaller than the consumer welfare loss from agency problems.

In 2017, approximately 400,000 high debt-to-income mortgages met the definition of the Bureau of Consumer Finance Protection’s Qualified Mortgage rule thanks to an exemption that grants QM status to high-DTI loans guaranteed by Fannie Mae or Freddie Mac. This exemption, referred to as the “GSE patch” is set to expire on January 10, 2021, or when the GSEs exit conservatorship, whichever comes first. This sets up an urgent need to determine what, if anything should replace the patch. This article offers three options to that end: 1) preserve the patch; 2) make QM determination based on overall riskiness, as measured by spread to a mortgage lending benchmark rate; or 3) drop the patch. The authors examine each option and recommend Option 2 because it strikes a healthier balance between expanding access to credit and limiting defaults to reasonable levels. Option 2 would eliminate both the DTI cap and the GSE patch while placing the private sector on a more equal footing with the GSEs. TOPICS:Legal and regulatory issues for structured finance, legal/regulatory/public policy

The development of science and technology promotes the constant changes of consumer finance, but also brings some financial credit risks. In particular, with the continuous development of Internet finance, financial credit risk is increasingly difficult to control. Based on machine learning algorithm, this study improved the machine learning algorithm and named it MLIA algorithm. Meanwhile, this study decomposes the objective function into weighted sums of several basis functions. This study uses three typical test functions to compare the performance of MLIA prediction algorithm and logistic prediction algorithm. Simultaneously, this study analyzes the performance of MLIA financial credit risk prediction model by taking the data of an Internet financial company as an example. In addition, this study used the AUC (area under curve) value as a specific indicator of model performance verification. Research shows that machine learning has a good predictive effect on MLIA financial credit risk prediction and can provide theoretical reference for subsequent related research.

Lending to the working class is increasingly becoming an essential feature in modern capitalism. Marxist theory, however, does not possess an adequate account of this phenomenon, particularly its effect on labor exploitation. This paper seeks to show how Marxist economic theory could understand and account for this form of finance. It finds that lending to the working class enables increases in both absolute and relative surplus value. JEL Classification: B51, G21, J50

Budgeting is an important step in consumer finance. Budgeting behaviour is considered a desirable financial behaviour to indicate consumer financial capability. However, systematic research on budgeting behaviour with a large scale national sample is limited. The purpose of this study was to address this research gap and examine characteristics of budgeting behaviour from the perspective of a behavioural hierarchy, which is related to mental accounting. The assumption holds that consumer financial behaviours may be performed in a hierarchical manner along with an increase in economic resources. Using data from the 2015 National Financial Capability Study, evidence suggests that budgeting behaviour is at the lower end of the behavioural hierarchy. This finding has implications for consumer financial professionals.

We use the consumer finance monthly national survey to demonstrate that credit unions (CUs) in the United States did little to help consumers obtain a home equity line of credit (HELOC) during the ...

This dissertation examines the financial position of payday borrowers using the most detailed nationally representative survey of American finances - the Survey of Consumer Finances. Payday loans are short term, unsecured loans generally less than five hundred dollars. Borrowers pay dearly for such loans, as fees are typically $15 for every $100 borrowed. Because the term for these loans is never more than two weeks, the annualized percentage rate is quite large ~ 390%. For the first time, in 2007 the Survey of Consumer Finances included a question about use of payday loans, and so it is now possible to expand the analysis of payday borrowing beyond basic demographic information and income. Given these high costs, why would households choose this option for dealing with financial emergencies? I show that payday borrowing is driven more by a lack of resources, in particular available credit alternatives, rather than low incomes. In addition, budgeting is a significant factor. Another alternative that households often look to is financial support from friends and family. Access to financial support is driven by many of the same factors that make these households insecure. Nevertheless, I show "private safety nets" do indeed reduce payday borrowing. But network relations don't just entail receiving. The provision of financial support is correlated with overspending and increases the odds of payday borrowing. This dissertation makes several contributions to our understanding of payday borrowing. First, using the detailed data on savings and budgeting practices, it shows the importance of building resources to managing budgetary shortfalls. Second and relatedly, I show that borrowers have little financial alternatives - they are effectively shut out of credit markets, and at the same time their network relationships can be both a help and a hindrance for avoiding payday loans.

In this dissertation I present three theoretical papers, each as an individual chapter. The first paper is titled "The Economics of Discretion in Multi-Agent Decision Problems." It is premised on the idea that discretion is valuable when knowledge mismatches lead principals to delegate decisions to agents with specialized knowledge. In the paper, I consider a team setting, and I characterize the optimal delegated choice set that is offered to agents when an agency conflict is present. I show that the amount of discretion increases with the value of an agent's private information, with the degree of alignment between the principal and agents, and with the ex ante uncertainty faced by the principal and agents. The latter finding implies that discretion may be used by agents to hedge the risk that they face. Nevertheless, I demonstrate that when all participants have rational expectations, it is never optimal for agents to add strategic uncertainty to receive more discretion ex post. I conclude the paper by applying the theory to delegated portfolio management, which yields novel empirical implications in this setting.The second paper is co-authored with Bruce I. Carlin and Andrew Iannaccone and it is titled "Competition, Comparative Performance, and Market Transparency." In the paper, we study how competition affects market transparency, taking into account that comparative performance is assessed via tournaments and contests. Extending Dye (1985) to a multi-firm setting in which top performers are rewarded, we show that increased competition usually makes disclosure less likely, which lowers market transparency and may decrease per capita welfare. This result appears to be robust to several model variations and as such, has implications for market regulation.The final paper is co-authored with Bruce. I. Carlin and is titled "Political Influence and the Regulation of Consumer Financial Products." In the paper, we explore a theoretical model of product regulation in which the social planner chooses an optimal level of market complexity, given that people have varied sophistication. We investigate how several dimensions affect the quality of regulation: the skill of the social planner, imperfect information, lobbying efforts, voting behavior in elections, and political philosophy. We find that both sophisticated and unsophisticated market participants often vote to elect the least informed and educated planners, which erodes social welfare. Further, when concerns regarding equality are sufficiently large (i.e., a socialistic agenda), the social planner limits the market to one product. In such case, adequacy suffers and all market participants are equally worse off.

This paper uses detailed data from an online peer-to-peer lending intermediary to test whether local access to finance affects consumers’ willingness to pay for loans. After controlling for local economic conditions and borrower credit quality, we find that borrowers who reside in areas with good access to bank finance request loans with lower interest rates. This effect is stronger for borrowers with poor credit and those seeking small loans, suggesting that local access to finance is more important for marginal borrowers. Overall, our findings shed light on how consumers substitute between alternative sources of finance. This paper was accepted by Wei Jiang, finance.

The correct assessment of consumer credit ability is in interest of creditor and debtor and also increase stability of financial system. The article point out the major incorrectness in assessment of creditworthiness, occurring both on consumer and bank side. There are low safety buffer of bank rates, low costs of living, excessive period of credit, failure in information delivery and hidden information by consumers. The text includes the set of corrective and repair actions also, being at disposal of banks and consumer which increase efficiency of consumer credit ability assessment. Prawidłowa ocena zdolności kredytowej leży w interesie kredytodawcy i kredytobiorcy oraz służy stabilności systemu finansowego. W artykule dokonano identyfikacji głównych nieprawidłowości występujących w procesie oceny zdolności kredytowej klientów detalicznych, występujących zarówno po stronie banków jak i klientów. Należą do nich przyjmowanie niskich buforów bezpieczeństwa stóp procentowych, zaniżania kosztów utrzymania, nadmierne wydłużanie okresu kredytowania, zaniedbywanie obowiązków informacyjnych oraz zatajanie informacji przez konsumentów. W tekście znalazły się także propozycje działań korygujących i naprawczych, będących w dyspozycji obu stron rynku, podnoszących skuteczność oceny zdolności kredytowej.

A notable feature of most markets is that firms are multiproduct, in the sense that they offer for sale more than one single type of good. In this paper, I discuss a recent paper, Kaplan et al. (2016), that explores both empirically and theoretically price dispersion in a multiproduct setting. I discuss, with some detail, their empirical strategy and main empirical findings: a big part of price dispersion for a good in an area comes from stores with the same overall price level pricing individual goods in persistently different ways. I then go over the simple model proposed by the authors that can make sense of the novel empirical finding.

This article introduces readers to the Consumer Financial Protection Bureau (CFPB), a federal agency created under the Dodd–Frank Act to protect consumers of financial services and products. The CFPB has an important mission to ensure consumers have clear and timely information about consumer financial products and services in the marketplace so they can make the best decisions for themselves, as well as to foster competition and prevent unfair, deceptive, or abusive acts or practices. This article discusses some of the CFPB's rulemakings and other initiatives to achieve this transparency for consumers and questions whether the agency has conducted sufficient consumer research. The article suggests ways in which the CFPB could improve its work. Finally, the article briefly addresses how academic research may be able to assist the CFPB with its mission.

The Consumer Financial Protection Bureau (CFPB) has authority over several consumer financial protection laws that include mandatory disclosures to provide consumers with the information needed to make financial decisions. Mandatory disclosure is a common regulatory tool that presents opportunities to support consumers in their decision making; however, many aspects of disclosure effectiveness remain understudied. The CFPB is committed to studying mandatory disclosure to better inform policy makers about whether and how best to use disclosures to achieve policy goals. This research effort focuses on three primary areas: (1) identifying how the dimensions of a disclosure influence its efficacy; (2) examining how different methodologies should best be deployed for disclosure testing; and (3) studying the market effects of mandatory disclosures, particularly through firms’ responses. The CFPB will use a range of methodologies for this research, including qualitative and quantitative testing of disclosures, laboratory studies, field trials, survey research, and administrative data analysis. The authors hope that identifying these critical questions will encourage the academic community to contribute policy-relevant research.

This paper explores the impact of information avoidance in the context of consumer finance. Specifically, under what circumstances do individuals avoid information about their credit, and how does avoiding this information affect their future credit scores? Using data from a consumer finance platform, we find that a decline in credit score decreases the likelihood that an individual views her credit report in the future. We then measure the impact of receiving information on future credit scores, especially for those likely to avoid information. To obtain a causal local average treatment effect, we use variation in whether an individual views her credit report induced by email campaign A/B tests on a subsample of users who do not opt out of email communication. We find heterogeneous effects of information on credit scores. For individuals who were more likely to avoid information (users whose credit scores were decreasing), viewing their credit reports further decreases credit scores, while information increases credit scores for individuals less likely to avoid information. This finding suggests that encouraging individuals to access information when they are more likely to avoid information may worsen their financial health. We discuss the implications for firms' targeting strategies in retention efforts.