Financial (Dis-)Information: Evidence from an Audit Study in Mexico

26 Pages Posted: 20 Apr 2016

See all articles by Xavier Giné

Xavier Giné

World Bank - Development Research Group (DECRG)

Cristina Martinez Cuellar

University of Chicago

Rafael Keenan Mazer

World Bank

Date Written: June 1, 2014

Abstract

An audit study was conducted in peri-urban Mexico to understand the quality of information and products offered to low-income potential customers. Trained auditors visited multiple financial institutions seeking credit and savings products. Consistent with Gabaix and Laibson (2006), staff voluntarily provides little information about avoidable fees, especially to auditors trained to reveal little knowledge about the market. In addition, clients are almost never offered the cheapest product, most likely because staff is incentivized to offer more expensive products that are thus more profitable to the institution. This suggests that disclosure and transparency policies may be ineffective if they undermine the commercial interest of financial institutions.

Keywords: Financial Literacy, Access to Finance, Banks & Banking Reform, Insurance & Risk Mitigation, Emerging Markets

Suggested Citation

Gine, Xavier and Martinez Cuellar, Cristina and Mazer, Rafael Keenan, Financial (Dis-)Information: Evidence from an Audit Study in Mexico (June 1, 2014). World Bank Policy Research Working Paper No. 6902. Available at SSRN: https://ssrn.com/abstract=2445748

Xavier Gine (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

HOME PAGE: https://sites.google.com/site/decrgxaviergine/

Cristina Martinez Cuellar

University of Chicago

1101 East 58th Street
Chicago, IL 60637
United States

Rafael Keenan Mazer

World Bank

1818 H Street, NW
Washington, DC 20433
United States

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