Abstract
The development of financial markets and the low level of financial literacy does not facilitate consumer protection. A significant problem is the lack of information or unclear information regarding financial offers, including consumer credit. Financial protection for consumers can be increased by using systems that support consumers faced with a lack of transparency of consumer credit offers. The theoretical objective of the research is to identify the completeness of information allowing for verifying the annual percentage rate (APR) in the consumer credit offers presented and compared on websites of financial intermediaries and banks as well as the identify of APR calculation methods. After analysis of different credit offers (document analysis), a prototype of the system regarding credit costs measured at the appropriate interest rates (APR and AER) calculated in the correct manner was created. This may facilitate practices for informing consumers about the characteristics of consumer credit and at the same time support the implementation of the concept of responsible lending. The system developed uses a computer to simulate human thinking and to augment it with artificial intelligence. It facilitates the elimination the behavioral biases during the taking of financial decisions, which are the result of a low level of financial literacy.
Highlights
The objectives are detailed in the form of research questions: 1. Is every financial offer regarding consumer credit presented in a transparent and clear way? 2
Documents used in the qualitative research have a virtual version of genuine consumer credit offers, presented by banks and intermediaries presented at the websites of banks and intermediaries
The idea of a system supporting the transparency of consumer credit offers is to facilitate the consumer decision-making process through an improvement of information disclosure aimed at redressing information asymmetries between credit institutions and credit intermediaries and consumers
Summary
Adaptation of the promoted idea of responsible lending (OECD 2019; Wilson 2013) to real lending processes require meeting many conditions by different entities: loan providers and intermediaries with their good practice realization, responsible credit policy makers, as well as educated and conscious credit consumers (Ramsay and Williams 2020; Cherednychenko and Meindertsma 2019).The potential borrowers can receive loan offers from multiple lenders: directly from the banks and from private lenders and different intermediaries (Ivashina et al 2020; Bertsch and Rosenvinge 2019; Bruckner 2018; Gutiérrez-Nieto et al 2011). Platforms connect consumers with multiple lenders as well as offer an array of online tools and information to help consumers find the best loan. The results of research confirm that digitalization in the financial sector may facilitate providing information upfront in a clear and comparable way Consumers have the option to use price comparison websites. The results of the latest research confirm that online comparison tools are seen by most users (90%) as the quickest way to compare prices, and more than half stated that they usually purchased the cheapest product displayed on the website. Most respondents were rather negative toward price comparison websites, stating that these tools are not independent and impartial Most respondents were rather negative toward price comparison websites, stating that these tools are not independent and impartial (Suter et al 2019, pp. 58–59)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
