Can Regulation Improve Financial Information and Advice?

Tennyson, Sharon

doi:10.36544/irfc.2016.1.1-1

Cited by 3 publications

(2 citation statements)

References 26 publications

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“…On the other hand, in many countries, increasing sophistication of financial markets, and aging populations necessitate a new approach in the area of financial education. For example, Tennyson (2016), discusses the use of "libertarian-paternalistic" policies or "nudges". In Japan, as already mentioned, the Government has introduced new financial schemes such as iDeCo and Tshumitate NISA.…”

Section: ⅴ International Implication Of Japan's Experiencementioning

confidence: 99%

Financial Education Renaissance in Japan and the Role of CCFIS : A Policy Commentary

Yoshikuni¹

2018

IRFC

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Financial education became a global agenda after the global financial crisis, and is one of the important elements of the SDGs. In Japan, although we have established a comprehensive system of financial education, the level of financial literacy is not high enough in comparison to other advanced economies. Rapid aging of the society and the increase in financial fraud demonstrate stronger need for enhancing the financial literacy of general public. The Central Council for Financial Services Information responded by publishing the Financial Literacy Map which describes the necessary knowledge and skills regarding money and finance, targeting at different age groups. We also conducted the Financial Literacy Survey, the result of which was widely reported by mass media. Based on the aforementioned products of our work, the Council is conducting various seminars, and publishing materials aimed at protecting consumers from financial fraud by enhancing their financial literacy and at providing necessary knowledge and skills to cope with the era of the 100-year life. In this connection, we are faced with the issue of how to enhance the financial literacy of teachers in times of rapid financial innovation, as well as in the unprecedented financial environment, such as the zero/negative interest rates. In particular, FinTech could have the effect of causing reverse literacy gap between teachers and students. In order to deal with such challenges, the Council is collaborating with relevant public and/or private institutions, e.g., the Financial Services Agency, local governments, representatives of financial institutions, to revive the spirit of Meiji era, when prominent figures stressed the importance of money in life. We should aim at “financial education renaissance” in Japan.

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Section: ⅴ International Implication Of Japan's Experiencementioning

confidence: 99%

Financial Education Renaissance in Japan and the Role of CCFIS : A Policy Commentary

Yoshikuni¹

2018

IRFC

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“…lending channels (direct lending vs. third-party lending vs. on-line lending), product attributes (maturities, interest variability, principal amortization, and prepayment penalty), and funding method (deposit-based vs. whole-sale based). It is documented in the literature that financial consumers are in general not that informed about risk profiles of available financial products (Miles (2004) for the UK case, Agawal et al (2010) for the U.S. case), and that the various education programs to enhance financial literacy for consumers tend to be ineffective (Tennyson (2016)). Hence, a more micro, or segment-specific, approach is warranted in designing an FCP policy to better match loan products to various consumer cohorts, which consider both dimensions of product affordability and of prudent risk management.…”

Section: ⅴ Summary and Concluding Remarksmentioning

confidence: 99%

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

Cho¹,

You

Lee

2017

IRFC

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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.

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Financial Consumer Protection in the Era of Digital Transformation: A Critical Survey of Literature and Policy Practices

Cho¹,

Park

2021

SSRN Journal

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This study aims to shed light on how to foster a welfare-enhancing policy regime for financial consumer protection (FCP), mainly through a literature and institutional survey on three pillars of FCP policyfinancial education, ex ante (or before point of sale) FCP measures, and ex post policy instruments. To that end, we first conceptualize the typical behavioral patterns in the demand-and supply-side of the financial markets, to be tamed through an FCP policy regime, and also attempt to reflect the ramifications of the on-going global trend of digital transformation. As to the first pillar, most of the literature claims that no consensus exists as to the goal of financial education (FE), one that is clear, specific, and measurable enough to guide empirical endeavor to gauge its effectiveness. On this issue, we suggest three dimensions of financial capability as possible targets of measuring the effectiveness of FE -knowledge dimension, choice and decision dimension, and outcome dimension, and discuss a possible testing strategy. Another issue stressed is that, given the inherent complexities in most financial products, the second letter "E," i.e., pedagogy and timing, should be given a higher weight than the first one "F," i.e., contents, in designing a FE strategy. In the supply-side, three sets of policy instruments are discussed as the key FCP elements: that is, the self-regulation mechanisms such as code of conduct, and training and certification programs for business ethics; the behavioral principles along with rules and regulations to ensure fair and ethical consumer treatment (FECT); and, internal governance structure to align FECT with incentives of employees of financial institutions. In addition, dispute resolution mechanism along with the legal responsibility of service providers if and when FECT is violated are also discussed. Using the key findings, we develop a template, or a checklist, by interacting the key behavioral patterns to be tamed with the FCP policy instruments, and suggest a set of indicators based on the matrix developed to be used for international comparison.

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Can Regulation Improve Financial Information and Advice?

Cited by 3 publications

References 26 publications

Financial Education Renaissance in Japan and the Role of CCFIS : A Policy Commentary

Financial Education Renaissance in Japan and the Role of CCFIS : A Policy Commentary

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

Financial Consumer Protection in the Era of Digital Transformation: A Critical Survey of Literature and Policy Practices

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