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
Date Written: October 4, 2017
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
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