Financial consumer protection and economic growth

Abstract

Purpose The purpose of this paper is to examine the link between financial consumer protection (FCP) and economic growth. Design/methodology/approach The authors use cross-country data on 114 countries surveyed in the World Bank Global Survey on FCP and Financial Literacy (2013) and endogenous treatment regressions for the estimation. Findings The results indicate that FCP enhances economic growth through fair treatment, responsible lending, enforcement and dispute resolution and recourse regulations. The authors find no evidence to suggest that disclosure and compliance monitoring regulations have an effect on economic growth. Practical implications This study provides rich insight into the important question faced by policy makers, as to which FCP regulatory mechanisms to put in place to enhance economic growth. Originality/value This study provides current, cross-country empirical evidence on the debate as to whether FCP enhances economic growth.