Consumer Financial Protection

JOURNAL OF ECONOMIC PERSPECTIVES

Volume 25, Issue 1, Pages 91-113

AMER ECONOMIC ASSOC

The recent financial crisis has led many to question how well businesses deliver services and how well regulatory institutions address problems in consumer financial markets. This paper discusses consumer financial regulation, emphasizing the full range of arguments for regulation that derive from market failure and from limited consumer rationality in financial decision making. We present three case studies-of mortgage markets, payday lending, and financing retirement consumption-to illustrate the need for, and limits of, regulation. We argue that if regulation is to be beneficial, it must be tailored to specific problems and must be accompanied by research to measure the effectiveness of regulatory interventions.

Economics

1. NIA NIH HHS [R01 AG021650, R01 AG021650-08] Funding Source: Medline