Responsible Lending : Overview of Regulatory Tools

Responsible Lending : Overview of Regulatory Tools

This paper provides an overview of key regulatory actions a government may implement to support responsible lending. It covers a range of possible interventions, including the provision of information, developing consumers' ability to use that...

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Bibliographic Details
Main Author:	Prouza, Tomáš
Format:	Other Financial Sector Study
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABILITY OF CONSUMERS ACCESS TO CREDIT ACCESS TO INFORMATION ADMINISTRATIVE COSTS ADVERTISEMENTS AFFORDABILITY ANNUAL PERCENTAGE RATE ANNUAL STATEMENT APR ARREARS ASSESSMENT PROCESS AVAILABILITY OF CREDIT BANK CREDIT BANK LENDING BANKERS ASSOCIATION BANKING SERVICES BANKRUPTCY BANKS BEHAVIORAL ECONOMICS BEST PRACTICES BIASES BORROWER BORROWING BUDGETING CALCULATION CALCULATIONS CAPITAL MARKETS CASH FLOW CASH FLOWS CASH RESERVES CHECKS COLLATERAL COMPARISON SHOP CONSUMER CONSUMER BEHAVIOR CONSUMER COMPLAINTS CONSUMER CREDIT CONSUMER ISSUES CONSUMER LENDING CONSUMER LOAN CONSUMER MARKETS CONSUMER ORGANIZATIONS CONSUMER PROTECTION CONSUMER UNDERSTANDING CONSUMERS COST OF CREDIT CREDIT BUREAU CREDIT BUREAUS CREDIT CARD CREDIT CARDS CREDIT DECISION CREDIT FACILITIES CREDIT HISTORY CREDIT LIMITS CREDIT MARKET CREDIT MARKETS CREDIT PRODUCTS CREDIT PROVIDERS CREDIT PROVISION CREDIT REPORTS CREDIT SCORING CREDITOR CREDITORS CREDITWORTHINESS CURRENT ACCOUNT CURRENT INCOME DEBT DEBT LIMITS DEBT REPAYMENT DEBT-TO-INCOME RATIO DEBTOR DEBTORS DEBTS DECEPTIVE PRACTICES DEPOSIT DEPOSIT INSURANCE DISCLOSURE OF INFORMATION DISCLOSURE REQUIREMENTS DISPOSABLE INCOME DIVORCE ECONOMIC GROWTH ECONOMIC SHOCKS EXCHANGE RATE EXTORTIONATE CREDIT FAIR LENDING FAMILY MEMBER FAMILY STRUCTURE FARMERS FDIC FEDERAL DEPOSIT INSURANCE CORPORATION FEDERAL RESERVE FINANCES FINANCIAL ACCESS FINANCIAL BENEFITS FINANCIAL CAPACITY FINANCIAL CIRCUMSTANCES FINANCIAL CONSUMER FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL EXCLUSION FINANCIAL EXPERIENCES FINANCIAL INDUSTRY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL LITERACY FINANCIAL LITERACY SURVEYS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PRODUCT FINANCIAL PRODUCTS FINANCIAL SECTOR FINANCIAL SECTOR POLICY FINANCIAL SECTORS FINANCIAL SECURITY FINANCIAL SERVICE FINANCIAL SERVICE PROVIDERS FINANCIAL SERVICES FINANCIAL SERVICES AUTHORITY FINANCIAL SERVICES PROVIDERS FINANCIAL SITUATION FINANCIAL SITUATIONS FINANCIAL STABILITY FINANCIAL SYSTEM FOREIGN CURRENCY FUTURE INCOME GREATER ACCESS GROSS INCOME HOUSEHOLDS INCOME INCOME LEVEL INCOME TAXES INCOMES INDEBTEDNESS INEXPERIENCED CONSUMERS INFLATION INFORMATION ON CREDIT INFORMED DECISION INFORMED DECISIONS INSTALLMENTS INSURANCE INTEREST CHARGES INTEREST RATE INTEREST RATE CEILINGS INTEREST RATES INVESTMENT PRODUCTS JOB LOSS LACK OF INFORMATION LACK OF INTEREST LATE PAYMENTS LENDER LENDERS LENDING POLICIES LENDING POLICY LENDING REGULATION LOAN LOAN AMOUNT LOAN APPLICATION LOAN APPROVAL LOAN PRODUCTS LOAN SHARKS LOCAL BUSINESSES LOW INCOME LOW INTEREST RATES LOW-INCOME LOW-INCOME CUSTOMERS LOW-INCOME FAMILIES MARKET PARTICIPANTS MARKETING MEDICAL CARE MICROFINANCE MINIMUM PAYMENTS MONETARY POLICY MONEYLENDERS MONTHLY INCOME MONTHLY PAYMENT MONTHLY PAYMENTS MORTGAGE MORTGAGE APPLICATIONS MORTGAGE FRAUD MORTGAGE LENDER MORTGAGE LENDERS MORTGAGE LENDING MORTGAGE PAYMENTS MORTGAGE PRODUCTS MORTGAGES NATIONAL BANK NEGATIVE CREDIT HISTORY OFFICE OF FAIR TRADING POOR FINANCIAL DECISIONS PREDATORY LENDERS PREDATORY LENDING PREPAYMENT PENALTIES PROBABILITY PROPERTY OWNERSHIP PROPERTY TAXES PROVISION OF INFORMATION REAL COST REAL COSTS REAL ESTATE REGULATORY GUIDANCE REPAYMENT REPAYMENT CAPACITY REPAYMENTS RESPONSIBILITIES RETAIL BANKS RETAIL CREDIT RETIREMENT RISK MANAGEMENT RISKY BEHAVIOR SALARY SALE SALES SALES AGENTS SAVINGS SENIOR SOUND FINANCIAL DECISIONS SOURCE OF INFORMATION TOTAL COST TOTAL COSTS TRUE COST TYPES OF LOANS UNEXPECTED EXPENSE UNEXPECTED EXPENSES UNION UTILITY BILL UTILITY BILLS VALUABLE
Online Access:	http://documents.worldbank.org/curated/en/2013/10/18639527/responsible-lending-overview-regulatory-tools http://hdl.handle.net/10986/16728

Description
Summary:	This paper provides an overview of key regulatory actions a government may implement to support responsible lending. It covers a range of possible interventions, including the provision of information, developing consumers' ability to use that information, formal requirements for responsible behavior of the lenders, and regulatory limits for loans. Because the research on the effectiveness of the responsible lending policies is limited, the paper focuses on literature overview and empirical evidence when available and uses case studies to describe key policies. A regulator seeking to develop a responsible lending framework must cover all areas of the responsible lending regulatory and educational mix. No single solution may be applied universally. The regulators must ensure they understand the retail credit markets. The paper identifies main policy options and areas for further research. Better data on lending markets before and after the rules are introduced and more detailed understanding of consumer behavior helps in identifying effective regulatory rules and supervisory actions that help ensure more responsible lending while not limiting financial inclusion and the growth of the credit market. Access to credit is sometimes considered by national authorities a crucial measure of financial inclusion. Low-income countries where microfinance is a key contributor financial inclusion may use similar measures.

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