Consumer Finance Research Articles

PENGARUH KONFLIK PERAN GANDA, STRES KERJA, DAN DISIPLIN KERJA TERHADAP KINERJA KARYAWAN WANITA

In the world of employment, not only men have the opportunity to occupy important positions in the organization, women also have the same opportunities. One company with a male-dominated workforce such as a consumer finance company also provides equal opportunities for female workers. The object of this research is PT. Federal International Finance Denpasar-2 Branch due to the decline in the performance of female employees which is thought to be influenced by several causes including multiple role conflicts, work stress, and work discipline. This study aims to determine the effect of dual role conflict, work stress and work discipline on the performance of female employees. The population of this study were married female employees with a sample of 30 respondents. The data analysis technique uses Validity Test, Reliability Test, Classical Assumption Test, Multiple Linear Regression Analysis, Coefficient of Determination Test, F Test and t Test. The results of the study found: (1) dual role conflict had a significant negative effect on the performance of female employees, (2) work stress had a significant negative effect on the performance of female employees, (3) work discipline had a significant positive effect on the performance of female employees. To improve the performance of female employees, the company is expected to be able to provide encouragement or encouragement to employees, always escort employees at work, give warnings or punishments to employees who do not obey the rules and always help employees when experiencing difficulties at work.Keywords: Multiple Role Conflict, Work Stress, Work Discipline and Employee Performance

Supporting the Age-Period-Cohort model of default rate prediction with interpretable machine learning

Regular short-term forecasting of defaults is a basic activity of a retail portfolio risk manager. From a business perspective, not only the quality of the forecast is significant, but also the understanding of the trends and their driving factors. The vintage analysis and a more advanced Age-Period-Cohort approach are popular tools used for the purpose. The aim of this article is to demonstrate that interpretable machine learning can support the Age-Period- Cohort approach, facilitating forecasting beyond the time range of training data, eliminating the model identification problem and attributing cohort quality to the specific characteristics of loans approved in a given month. The study is based on real consumer finance portfolios from the Polish market.

VALIDATING FACTORS AFFECTING PEOPLE’S INTENTION TO USE FINANCE COMPANIES’ SERVICES IN INDONESIA

For the past decades, leasing and consumer finance had become the most popular types of service used and chosen by Indonesians to conduct various kind of purchasing activities toward productive and consumptive assets that people want to buy, such as cars, motorcycles, machineries, and the other kind of productive or consumptive assets. In this case, such behaviour was important to be thoroughly understood and evaluated in order to understand why these people opted to use leasing or consumer finance services as opposed to directly pay for these kinds of assets themselves. Therefore, this research attempt to thoroughly evaluated and validated some factors which were hypothesized could significantly affect people’s intention to use leasing or consumer finance services for the assets that these people were buying. Implementing purposive sampling in order to ensure that all respondents who participated in this study had conformed to all criteria set in this research, questionnaires were distributed to a total of 123 respondents who’ve used leasing or consumer finance services for the assets that they bought (such as cars, motorcycles, and machineries) participated in this research. All of these data then were thoroughly analysed using partial least squares-structural equation modelling (PLS-SEM) using SmartPLS 4 software. Based on the results of the data analyses obtained in this study, three factors, namely attitude toward using leasing/consumer finance services, subjective norm and perceived financial risk toward the product significantly affect people’s intention to buy assets through finance companies who provide leasing and/or consumer finance (financial services) in Indonesia.

Development of High School Home Economics Financial Consumer Education Program based on Backward Design

The purpose of this study was to develop a high school home economics financial consumer education program based on backward design and validation by experts. The program was designed and developed by first selecting learning content elements through a review of existing research and an analysis of relevant literature. The next step was to categorize these elements into seven themes and apply the backward design instructional design model 2.0. The program was prepared in the form of a 21st teaching-learning course plan and workbook and was verified by nine home economics teachers with working experience in high school. The evaluation revealed that the average value for all questions was 3.81 (out of 4 points) and the CVR was .99, indicating that the program was valid. In addition, positive evaluations were received in terms of learning goals, content level, and learner participation by class. This study has significance in that a systematic financial consumer education program was developed by Education of Home Economics to improve the financial literacy of high school students. It can therefore be used as an elective course (mini-course) in Home Economics in the high school credit system. A follow-up study will be required to assess the improvement in financial literacy after implementing this program.

The regulatory nexus between the promotion of financial education and financial inclusion in enhancing consumer protection in South Africa

This paper seeks to share some insights on the regulatory aspects of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa. In recent years, policymakers in different countries, including South Africa, have made various efforts to regulate financial inclusion and integrate financial consumers into the financial sector. Similarly, policymakers and other relevant stakeholders have made efforts to promote financial education to empower financial consumers to make sound financial choices and decisions. Notwithstanding these efforts, the promotion of financial education and financial inclusion has been done in isolation, overlooking the policy synergies between these objectives and/or financial sector outcomes in enhancing consumer protection in South Africa. Given the recent COVID-19 pandemic, both financial education and financial inclusion have become increasingly important policy considerations to negotiate the chasm from the challenges that financial consumers faced before the pandemic and move towards safeguarding the economic interests of financial consumers post-pandemic. Accordingly, this paper explores the interrelationship between the effective promotion of financial education and financial inclusion to enhance consumer protection. Moreover, this paper examines the adequacy of the regulation of financial education and financial inclusion under the National Credit Act 34 of 2005 (NCA); the Consumer Protection Act 68 of 2008 (CPA), the Financial Sector Regulation Act 9 of 201 7 (FSR Act) and the proposed Conduct of Financial Institutions Bill (CoFI Bill) in relation to strengthening consumer protection. Put differently, this article focuses on the regulatory nexus of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa. In the end, this article will provide some recommendations and enforcement approaches that could be incorporated into the regulatory framework of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa.

FinTech and Banks: Strategic Partnerships That Circumvent State Usury Laws

Previous research has found evidence suggesting that financial technology (FinTech) lenders seek out opportunities in markets that have been underserved by mainstream banks. The research focuses primarily on the effect of bank market structure, limited income, and economic hardship in attracting FinTech companies to underserved markets. This paper expands the scope of FinTech research by investigating the role of interest rate regulation of consumer credit and institutional risk segmentation in FinTech lenders’ efforts to solicit new customers in the personal loan market. We find that strategic partnerships between FinTech companies and specialist banks target marginal-risk, near-prime, and low-prime consumers for credit card and other debt consolidation loans. These FinTech-bank partnerships especially target marginal consumers in states with low interest rate ceilings. Mainstream banks largely avoid higher-risk consumers, and low rate ceilings inhibit consumer finance company lending, which historically has been the major source of personal loans for higher risk consumers and may compete with banks at the margin. In partnering with the specialist banks, the FinTech lenders are able to take advantage of federal preemptions from state rate ceilings to lend profitably to higher-risk consumers in states with low rate ceilings to compete in these markets.

Rethinking Financial Consumer Protection Measures for Elder Customers

Rethinking Financial Consumer Protection Measures for Elder Customers

The Law and Economics Perspective of Financial Consumer Protection Laws and Regulations: Focusing on the Application of Behavioral Economics

The Law and Economics Perspective of Financial Consumer Protection Laws and Regulations: Focusing on the Application of Behavioral Economics

Retracted: Complexity Analysis of Consumer Finance following Computer LightGBM Algorithm under Industrial Economy

Retracted: Complexity Analysis of Consumer Finance following Computer LightGBM Algorithm under Industrial Economy

The Effect of Financial Services Authority Regulatory Implementation Concerning Financial Consumer Protection on Banking Financial Performance

Many parties engage in banking as the financial services industry grows, particularly in Indonesia. To keep banks safe, financial services must emphasize customer protection. The Financial Services Authority (OJK), Indonesia's financial services regulator, implemented several consumer protection measures. The policy may hurt banks despite protecting customers. Consumer protection laws strengthen banks. Proper protection would make clients feel safer and increase bank trust. Banks with strong consumer protection regulations will attract more clients since customers will feel safe doing so. This study examines how the OJK regulation's implementation on financial services consumer protection affected national commercial banks' financial performance from 2017 to 2021. This study adopts descriptive and verifiative approaches to analyze 93 national commercial banks in Indonesia from 2017 to 2021. The research utilizes secondary data from the Financial Services Authority (OJK) and bank financial statements. The investigations done have led to the conclusion that implementing consumer protection can improve bank financial performance and lower credit risk

Learning from peers: Evidence from disclosure of consumer complaints

In 2013, the U.S. Consumer Financial Protection Bureau released a database of consumer complaints filed against banks under its supervision (“CFPB banks”). We find that after the disclosure, rival banks exhibit a greater increase in mortgage approval rates in markets with more intensive mortgage complaints about CFPB banks. The effect is weaker when rivals have more expertise in the local market, are less concerned about credit risk due to mortgage sales, and locate in areas with more alternative information about the CFPB banks. The effect is concentrated in severe complaints and complaints related to loan underwriting practices. In addition to approving more loans, rivals also open more branches and are more likely to post a job opening in these markets. The findings suggest that these banks learn from the nonfinancial disclosures about operational deficiencies of peers (i.e., CFPB banks) in local markets, which alleviates their adverse selection concern about expanding.

Aligning incentives: The effect of mortgage servicing rules on foreclosures and delinquency

Foreclosures have large societal costs, and in many cases are more costly to mortgage-holders than the borrower resuming payments. In 2014, the U.S. Consumer Financial Protection Bureau (CFPB) implemented regulations for mortgage servicers aimed at addressing servicer conduct that may have led to unnecessary foreclosures in the late 2000s. The rule included a new requirement to delay foreclosure until borrowers were at least 120-days delinquent in most cases, up from typically 90 days. I use a large panel of mortgage performance data to estimate the effect of the CFPB rules on foreclosures, and on the ability of delinquent borrowers to recover and become current. I find the rule reduced the incidence of foreclosure within three years, and increased the incidence of recovery. The minimum delinquency requirement seems to have been a factor. In a separate analysis using a unique dataset of detailed loan-level information from seven mortgage servicing firms, borrowers who became 90-days delinquent after the rule went into effect were six percentage points less likely to have foreclosure initiated within two months. I also find that the rule had larger effects on loans that would be more likely to receive a successful loan modification based on mortgage holder policies.

Examine the level of financial awareness among financial consumers on the basis of their age, gender, and locality

Examine the level of financial awareness among financial consumers on the basis of their age, gender, and locality

A Novel Tripartite Evolutionary Game Model for Internet Consumer Financial Regulation

Due to many social problems caused by Internet consumer finance, Internet consumer finance regulation has always become one of the main concerns of governments and society. Based on a novel three-dimensional mixed strategy game matrix, this paper constructs a tripartite evolutionary game model for regulators, Internet consumer financial institutions, and consumers. In this model, we establish the dynamic replication equation of the three parties above, analyze the influence of factors on the tripartite strategy selection and discuss the stability of model equilibrium points through numerical simulation. The results show that the model will get six evolutionary stable points in Internet consumer financial regulation under different conditions. Moreover, strict regulation, verification, and contract keeping are the most ideal evolutionarily stable strategies. In addition, three critical factors affect the evolution results of the three parties, namely losses to institutions caused by loose regulation and verification, punishment for loose verification under strict regulation, and losses from breaking the contract.

Simplifying Complex Disclosures: Evidence from Disclosure Regulation in the Mortgage Markets

ABSTRACT Complex disclosures have long been a major source of borrowers’ poor understanding of mortgages. We examine the effect of simplifying mortgage disclosures in a difference-in-differences design around a significant disclosure rule mandated by the Consumer Financial Protection Bureau in 2015. We find that inexperienced borrowers (first-time home buyers) pay significantly lower interest rates after the disclosure regulation than experienced borrowers (repeat buyers), suggesting that simplifying these disclosures reduces mortgage interest costs. Additional tests show that the reduction in interest costs is not accompanied with more upfront noninterest costs paid by borrowers. Our cross-sectional analyses reveal two mechanisms through which simplifying disclosures lowers interest costs: curbing predatory lending and facilitating borrower shopping. We further find that disadvantaged borrowers (Black, Hispanic, and single female) benefit more from simplified disclosures. Last, we do not find that simplifying disclosures affects mortgage loan performance. JEL Classifications: G21; G5; G18; M4.

Earnings expectations and the quality of financial services

Using complaint data filed by consumers with the Consumer Financial Protection Bureau against financial institutions, we show that banks receive, on average, 13.3% more customer complaints in the quarter immediately after they narrowly beat analysts’ earnings forecasts. The effect is mainly driven by banks’ attempts to reduce their non-interest expenses to beat earnings benchmarks. The relationship is stronger when bank CEOs receive a greater proportion of incentive-based compensation. Overall, our paper demonstrates how capital market incentives exacerbate shareholder–customer conflicts.

Impact assessment and execution strategies of fintech in consumer finance: Paving the way forward

The increasing adoption of FinTech has revolutionized the consumer finance industry, providing innovative solutions that cater to the needs of consumers. FinTech companies disrupt established financial institutions and challenge the status quo, resulting in a dynamic and rapidly changing landscape. However, the success of FinTech in consumer finance depends on its impact execution, which involves the ability to deliver measurable and sustainable outcomes. This requires a comprehensive understanding of the market, a deep understanding of consumer needs, and the ability to effectively execute strategies that meet these needs. This paper examines the significance of FinTech in consumer finance to perform a comprehensive SWOT and PESTEL analysis of FinTech in consumer finance. Moreover, this is attempting to find out the opportunities and challenges of FinTech in the context of consumer finance and investigate trends of FinTech in consumer finance. By implementing the strategies outlined in this paper, FinTech companies can continue to drive innovation, increase access to financial services, and deliver measurable consumer outcomes.

설명가능한 인공지능(XAI) 기술도입이 금융서비스의 혁신성과를 향상시키는가?

XAI (eXplainable Artificial Intelligence) is an artificial intelligence technology that analyzes the causal relationship of artificial intelligence decision-making, finds appropriate evidence, and explains decision-making results at the user level. Customers of the XAI model are practitioners of financial institutions that operate the model and provide results to customers, and financial consumers who use the results of the AI algorithm model. The financial industry generates profits by managing individual and institutional funds, but also has responsibility for its management. Although artificial intelligence algorithms are being applied to tasks such as the discovery of financial crimes and cyber-crime that are becoming more intelligent and repetitive credit evaluations, unexpected algorithm vulnerabilities can cause losses due to incorrect judgments. XAI presents the basis for the results of artificial intelligence algorithms in the financial sector, and financial companies to which XAI is applied can reduce the possibility of wrong decision-making by artificial intelligence. This study aims to explore the XAI characteristics and influencing factors in the financial sector that affect the reliability and satisfaction of domestic financial consumers, and examine how these factors affect innovation performance in the financial sector. DARPA mentioned user satisfaction, explanation model level, task performance improvement, reliability evaluation, and error correction level as XAI's competency evaluation factors (competency evaluation index). This study refers to DARPA's XAI competency evaluation index, G20's human-centered artificial intelligence society principles, and the Financial Services Commission's financial sector artificial intelligence guidelines, etc. In addition, the innovation performance of financial institutions according to the introduction of XAI technology and service supply was set as a dependent variable. In order to verify the research model, an online survey was conducted targeting workers in companies introducing XAI in the financial sector. As a result of the study, it was found that the XAI characteristics of the financial sector (transparency, explainability, reliability, and result demonstrability) had a significant effect on innovation performance in the financial sector.

Algorithmic Credit Scoring in Vietnam: A Legal Proposal for Maximizing Benefits and Minimizing Risks

AbstractArtificial intelligence (AI) and big data are transforming the credit market around the world. Algorithmic credit scoring (ACS) is increasingly used to assess borrowers’ creditworthiness, using technology to glean non-traditional data from smartphones and analyze them through machine-learning algorithms. These processes promise efficiency, accuracy, and cost-effectiveness compared with traditional credit scoring. However, this technology raises public concerns about opacity, unfair discrimination, and threats to individual privacy and autonomy. Many countries in Southeast Asia are introducing ACS in consumer finance markets, although—even with the significant concerns raised—there is an ongoing and concerning lag in oversight and regulation of the process. Regulation is vital to delivering big data and AI promises in the financial services market, while ensuring fairness and public interest. This article utilizes Vietnam, where the lending industry deploys ACS but in a situation of legal limbo, as a case-study to analyze the consequences of this technology. Vietnam is one of the foremost Southeast Asian countries in which ACS usage is spreading rapidly, and this provides an excellent opportunity to review the regulation, or lack thereof, and determine the implications that this may have for other countries that are currently introducing ACS in consumer finance markets. The article concludes with a proposal to regulate ACS in Vietnam based on international regulation and guidelines on ACS, data privacy, and AI to enable a transparent, accessible, and fair process.

금융소비자보호법상 보험상품의 설명의무와 그 위반의 효과

In general, sales of insurance products are not only made in the form of conforming contracts that depend on terms and conditions, but also there is a risk of damage to the policy holder due to information asymmetry and incompatibility of status between the parties to the contract, and thus in order to improve the fairness and equity of contracts, various safeguards are being prepared for them. Among these, the most important protection device is the insurer's duty of explanation.
 Therefore, the Commercial Act and other special laws stipulate various obligations of explanation in order to protect policy holders when signing and transferring insurance contracts, and in particular, the obligation to explain terms and conditions and the obligation to explain insurance products are separately regulated. In other words, Article 638-3 of the Commercial Act and Article 3 of the Terms and Conditions Regulation Act give the insurer the duty to deliver and explain the terms and conditions, and the recently enacted Article 19 of the Financial Consumer Protection Act separately and specially imposes the duty to explain important details of insurance products.
 In this paper, while comparing and analyzing the relationship between these regulations, the obligation to explain insurance products under the Financial Consumer Protection Act was reviewed and the effect of the violation was considered. In particular, regarding the problem of the right to withdraw subscription and the right to terminate an illegal contract as an effect of violation of duty of explanation, legislative alternatives were sought, focusing on the following issues.
 First, after the duty of explanation under the Insurance Business Act was transferred to the Financial Consumer Protection Act, what characteristics the “duty to explain” of insurance products under the Financial Consumer Protection Act compared to the duty of explanation under the Commercial Act and the Contract Regulations Act were analyzed. And among the effects of violation of duty of explanation, the problem of the right to withdraw subscription and the right to terminate illegal contract was identified and a solution was derived.
 Second, it was examined what is the characteristics and differences in the exercise requirements and effects of “the right to withdraw subscription” and “the right to terminate illegal contracts” due to violation of the duty to explain insurance products under the Financial Consumer Protection Act compared to the legal effects of the general legal principles of the Civil Act, such as the right to withdraw, the right to cancel, and the right to terminate. In addition, in the application to insurance practice, what kind of collision problems occur between these regulations was examined, the root cause was identified, and improvement measures were prepared.