Research On The Financial Consumers’ Rights Protection Level

Financial consumers’ rights protection issue began to enter people’s vision in the latter half of the 20th century, and has got extensive concern of the international community since the outbreak of the global financial crisis in 2008. The world’s major economic organizations and the financial supervision authorities of some developed countries successively promulgated a series of financial consumer protection law and policy. China, as an underdeveloped country in the financial system, has not yet formed a systematic theoretical framework and specific legal system on financial consumers’ rights protection. Therefore, research on the financial consumers’ rights protection has very strong reality and urgency. What is the financial consumer? Which factors influence the financial consumer protection? How to evaluate the financial consumers’ rights protection level? These are the problems to be solved in this dissertation.First of all, this dissertation defines the concepts related to the financial consumers’ rights protection. Financial consumer is a natural person who purchase and use financial products and services to meet the needs of the individual or family life. And the level of financial consumers’ rights protection is referred to the effect of the implementation of various initiatives by the government to safeguard the financial consumers’ rights, to maintain the effect of multiple objectives of financial consumption equity and financial system security. It can also be known as the extent of protection to the financial consumers’ legitimate rights. Then, based on Consumer sovereignty theory, Twin peaks theory, information economics theory, and industrial economics theory, this dissertation discusses about the influencing factors of financial consumers’ rights protection level, and the mechanism of action.Endogenous factors include financial availability, government regulation and information structure factors. Financial availability affects the level of the financial consumers’ rights protection through the system and education conduction mechanism. Government regulation constraints financial institutions, encourages the financial producers to improve the product quality, motivates the sales agents to improve their work effort, and uses punitive damages to violates the illegal behavior. Information structure influences the level of financial consumers’ rights protection through direct and indirect effects. The performance of direct effect is that asymmetric information structure leads to consumers’ decision-making mistakes, or produces "Lemon Market" of adverse selection, resulting in a decline in the level of the financial consumer protection. The performance of indirect effect is that asymmetric information structure weakens the supervision power, and finally violates the financial consumers’ rights. Exogenous factors include financial development and financial stability factors. There exists the interaction of positive effects and negative effects among financial development, financial stability and level of financial consumer’ rights protection. The positive effect means that financial development and financial stability create good external environment conditions for the financial consumers’ rights protection. Meanwhile the latter can also promote the former two. The negative effect means that excessive financial development and innovation may damage the financial consumers’ rights, meanwhile the over-protection of financial consumers’ rights also may cause moral hazard and adverse selection, and finally hurt the foundation of financial development and stability.On the basis of mechanism analysis and realistic analysis, an empirical study is made for the level of financial consumers’ rights protection. Firstly, the comprehensive evaluation index system of the protection level is constructed, and the scores of the endogenous and exogenous factors are calculated through principal component analysis method. Secondly, the Granger causality relationship between the endogenous and exogenous factors is tested using co-integration analysis and Granger causality test, and the dynamic relationship between them is tested using impulse response function analysis. Thirdly, with the entropy method of empowerment, the composite index of China’s financial consumers’ rights protection in 2005-2014 is calculated, and the result shows that the level of financial consumers’ rights protection in China presents an upward trend. Finally, the comprehensive indexes of financial consumers’ rights protection of 48 countries and regions in 2013 are measured and ranked. Results show that European, North American and Oceania countries rank by the former, Latin American and African countries rank by the post, and the ranking of Asian countries polarizes. At the same time, there is an imbalance in the individual ranking of single index of countries and regions to a certain degree. China’s financial consumer protection level is not high, and the rank of regulatory elements is relatively backward. China should pay attention to the weakness about the regulation element, accelerate the legislation process of financial consumers’ rights protection, improve the regulatory agencies set, and carry out international cooperation on the financial consumers’ rights protection.The innovations of this dissertation are as follows. Firstly, this dissertation divides the influencing factors into endogenous factors and exogenous factors, and through theoretical analysis and game analysis, makes a study of the mechanism by which financial availability, government regulation, information structure, financial development and financial stability factors affect the financial consumer protection level. Secondly, to be different from most analysis based on the public interest theory, this dissertation establishes the Pelzman model of financial consumer protection regulation to interpret the intrinsic motivation of government regulation, which is more close to the reality. Thirdly, this dissertation constructs a level index system of the financial consumers’ rights protection, which is a supplement to study on the level measurement of the financial consumer protection, using principal component analysis, Granger causality test, impulse response function and entropy weight method to estimate the financial consumer protection comprehensive index, depicting the development trend of China’s financial consumers’ rights protection level, and carrying on a comparison of financial consumers’ rights protection among China and other countries and regions.