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Financial Consumer Protection and the Cost of Financial Intermediation: Evidence from Advanced and Developing Economies

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  • Fotios Pasiouras

    (Financial Engineering Laboratory, School of Production Engineering and Management, Technical University of Crete, Chania 731 00, Greece; and University of Surrey, Guildford GU2 7XH, United Kingdom)

Abstract

Using a data set of approximately 3,000 commercial banks from more than 100 countries, I examine the impact of financial consumer protection policies on the cost of financial intermediation. I find evidence that the existence of internal mechanisms for handling complaints, requirements for fair treatment, supervisory power related to consumer protection, and various disclosure requirements reduce the cost of financial intermediation in advanced countries. The results are different in the case of developing countries, where I observe that most financial consumer protection policies increase the cost of intermediation, suggesting that banks pass on regulatory burdens to their customers.

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  • Fotios Pasiouras, 2018. "Financial Consumer Protection and the Cost of Financial Intermediation: Evidence from Advanced and Developing Economies," Management Science, INFORMS, vol. 64(2), pages 902-924, February.
    • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:2:p:-902-924
    DOI: 10.287/mnsc.2016.2585
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