Information Disclosure and Demand Elasticity of Financial Products: Evidence from a Multi-Country Study

61 Pages Posted: 5 Oct 2017 Last revised: 27 Apr 2018

See all articles by Xavier Giné

Xavier Giné

World Bank - Development Research Group (DECRG)

Cristina Martínez Cuellar

Citibank, N.A.

Rafael Keenan Mazer

World Bank

Cristina Mart?nez Cuellar

affiliation not provided to SSRN

Date Written: October 4, 2017

Abstract

This study tests the effectiveness of behavioral-based disclosure formats. Around 1,700 individuals from Mexico and Peru chose among loans and savings accounts presented in different formats, including a simplified key facts statement (KFS) and current marketing brochures. The study finds that the price elasticity of loans is -1.04 using brochures and -3.19 using the simplified KFS, with smaller effects for savings products. Finally, while financial literacy is correlated with better decision-making, the effect of the disclosure format for loans is about three times as large as that of financial literacy. More importantly, the KFS helps financially illiterate individuals relatively more.

Keywords: Financial Literacy, Legal Institutions of the Market Economy, Educational Sciences, Private Sector Economics, Marketing, Private Sector Development Law, Access to Finance

Suggested Citation

Gine, Xavier and Cuellar, Cristina Martínez and Mazer, Rafael Keenan and Cuellar, Cristina Mart?nez, Information Disclosure and Demand Elasticity of Financial Products: Evidence from a Multi-Country Study (October 4, 2017). World Bank Policy Research Working Paper No. 8210, Available at SSRN: https://ssrn.com/abstract=3048119

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 Martínez Cuellar

Citibank, N.A. ( email )

399 Park Ave., 11th Floor
New York, NY 10043
United States

Rafael Keenan Mazer

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Cristina Mart?nez Cuellar

affiliation not provided to SSRN

No Address Available

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