Voice of the Customers: Local Trust Culture and Consumer Complaints to the CFPB
Journal of Accounting Research, Volume 59, Issue 3, 2021
Posted: 25 Jun 2021
Date Written: June 1, 2021
We use complaints filed with the Consumer Financial Protection Bureau (CFPB) to study the interplay between social norms and the effectiveness of consumer protection laws. We find that a higher level of trust in a given location is associated with a lower number of complaints filed against financial institutions in that location. Employing a difference-in-differences approach, we further find that, after the establishment of the CFPB, banks in low-trust areas reduce fees charged to consumers more compared to banks in high-trust areas. Our results suggest that the threat of consumer complaints to a government agency affects how banks treat their customers, and they shed light on the interaction between informal culture and formal institutions, as well as on stakeholders’ influence in corporate policies.
Keywords: culture; trust; Consumer Financial Protection Bureau; bank fees
JEL Classification: G21, M40
Suggested Citation: Suggested Citation