Financial (Dis-)Information : Evidence from a Multi-Country Audit Study
An audit study was conducted in Ghana, Mexico and Peru to understand the quality of financial information and products offered to low-income customers. Trained auditors visited multiple financial institutions, seeking credit and savings products. C...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/07/26581590/financial-dis-information-evidence-multi-country-audit-study http://hdl.handle.net/10986/24831 |
| Summary: | An audit study was conducted in Ghana,
Mexico and Peru to understand the quality of financial
information and products offered to low-income customers.
Trained auditors visited multiple financial institutions,
seeking credit and savings products. Consistent with Gabaix
and Laibson (2006), staff only provides information about
the cost when asked, disclosing less than a third of the
total cost voluntarily. In fact, the cost disclosed
voluntarily is uncorrelated with the expensiveness of the
product. In addition, clients are rarely offered the
cheapest product, most likely because staff is incentivized
to offer more expensive and thus more profitable products to
the institution. This suggests that clients are not provided
enough information to be able to compare among products, and
that disclosure and transparency policies may be ineffective
because they undermine the commercial interest of financial institutions. |
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