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Information disclosure and demand elasticity of financial products : evidence from a multi-country study

Author

Listed:
  • Gine,Xavier
  • Cuellar,Cristina Martínez
  • Mazer,Rafael Keenan
  • Gine,Xavier
  • Cuellar,Cristina Martínez
  • Mazer,Rafael Keenan

Abstract

This study tests the effectiveness of behavioral-based disclosure formats. Around 1,700 individuals from Mexico and Peru chose among loans and savings accounts presented in different formats, including a simplified key facts statement (KFS) and current marketing brochures. The study finds that the price elasticity of loans is -1.04 using brochures and -3.19 using the simplified KFS, with smaller effects for savings products. Finally, while financial literacy is correlated with better decision-making, the effect of the disclosure format for loans is about three times as large as that of financial literacy. More importantly, the KFS helps financially illiterate individuals relatively more.

Suggested Citation

  • Gine,Xavier & Cuellar,Cristina Martínez & Mazer,Rafael Keenan & Gine,Xavier & Cuellar,Cristina Martínez & Mazer,Rafael Keenan, 2017. "Information disclosure and demand elasticity of financial products : evidence from a multi-country study," Policy Research Working Paper Series 8210, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8210
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    Citations

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    Cited by:

    1. Bianchi, Milo & Bouvard, Matthieu & Gomes, Renato & Rhodes, Andrew & Shreeti, Vatsala, 2023. "Mobile payments and interoperability: Insights from the academic literature," Information Economics and Policy, Elsevier, vol. 65(C).
    2. Leora Klapper & Annamaria Lusardi, 2020. "Financial literacy and financial resilience: Evidence from around the world," Financial Management, Financial Management Association International, vol. 49(3), pages 589-614, September.
    3. Giné, Xavier & Mazer, Rafael Keenan, 2022. "Financial (dis-)information: Evidence from a multi-country audit study," Journal of Public Economics, Elsevier, vol. 208(C).

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