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Determinants of the knowledge of the total cost of consumer loans

Determinants of the knowledge of the total cost of consumer loans The purpose of this paper is to examine the influence of consumer-related and bank-related characteristics on the knowledge of the total cost of consumer loans paid by consumers and test the hypothesized relationships between them.Design/methodology/approachIn order to identify the proportion of consumers who do not know the total cost of consumer loans and reasons for it in the Chilean consumer loans industry, an empirical study using a survey administered through personal in-home interviews was carried out.FindingsResults show that knowledge of a consumer loans total cost is positively associated with product satisfaction as well as recent and infrequent purchases. This study also shows that a big market segment, comprising 37.2 percent of the probability sample, represents vulnerable consumers with high self-reported knowledge but low actual knowledge of the total costs of consumer loans. This study shows that this market segment has a higher use of the price-quality cue and a higher purchase frequency of consumer loans.Originality/valueThe present study contributes to the existing literature in the following ways. First, while previous research measured only self-reported knowledge for financial services, the present study examines actual knowledge of the total cost of consumer loans. Second, while previous research for financial services only examined the effects of the use of the price-quality cue and price advertising exposure, the present study also examines 11 other determinants, which are relevant for managers, regulators and researchers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Academia Revista Latinoamericana de Administración Emerald Publishing

Determinants of the knowledge of the total cost of consumer loans

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1012-8255
DOI
10.1108/arla-12-2015-0323
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to examine the influence of consumer-related and bank-related characteristics on the knowledge of the total cost of consumer loans paid by consumers and test the hypothesized relationships between them.Design/methodology/approachIn order to identify the proportion of consumers who do not know the total cost of consumer loans and reasons for it in the Chilean consumer loans industry, an empirical study using a survey administered through personal in-home interviews was carried out.FindingsResults show that knowledge of a consumer loans total cost is positively associated with product satisfaction as well as recent and infrequent purchases. This study also shows that a big market segment, comprising 37.2 percent of the probability sample, represents vulnerable consumers with high self-reported knowledge but low actual knowledge of the total costs of consumer loans. This study shows that this market segment has a higher use of the price-quality cue and a higher purchase frequency of consumer loans.Originality/valueThe present study contributes to the existing literature in the following ways. First, while previous research measured only self-reported knowledge for financial services, the present study examines actual knowledge of the total cost of consumer loans. Second, while previous research for financial services only examined the effects of the use of the price-quality cue and price advertising exposure, the present study also examines 11 other determinants, which are relevant for managers, regulators and researchers.

Journal

Academia Revista Latinoamericana de AdministraciónEmerald Publishing

Published: May 23, 2019

Keywords: Price knowledge; Financial services; Consumer-related characteristics; Bank-related characteristics; Consumer loans; Conocimiento de precios; Servicios financieros; Características relacionadas con el consumidor; Características relacionadas con el banco; Préstamos de consumo; M31

References