Evaluating Borrower’s Net Yield in Long-Term Fixed Rate Mortgage Loans in Korea

Seung ryul Ma 국제금융소비자학회 2019 The International Review of Financial Consumers(IR Vol.4 No.1

The Korean government has tried to change the structure of residential mortgages in Korea from the short-term variable-rate non-amorting loans to the long-term fixed-rate amorting loans since the early 2000’s. This study examines he borrower’s net yield from that new type of loans, which is defined as the difference between the lender’s yield out of the borrower’s repayment and the borrower’s yield from the expected gain on the portion of housing equity funded by cosnumer. The main hypothesis tested is that the borrower’s net yield will be affected by the time of loan origination and the level of mortgage interest rate charged because the future fluctuations of housing values and that of market interest rates are expected to be key determinants. The results confirm the hypothesis in that borrower’s net yields show positive or negative values according to the time of loan start, the level of fixed loan rates, or home regions. The results documented can offer a useful information as to the financial consumers’decision on loan amount and the timing of loan application considering the housing and mortgage market condition, which in turn can provide policy implication to regulating the maximum loan-to-value (LTV) ratio regulations.

Financial Education in the United States

Brenda J. Cude 국제금융소비자학회 2020 The International Review of Financial Consumers(IR Vol.5 No.2

Financial education in the United States in 2020 can be described as both organized and disjointed. State and local education governing bodies, non-profit organizations, and entrepreneurs all contribute to financial education, but often with little coordination. This article briefly describes financial education in the formal U.S. educational system as well as in the public and private sectors. It also highlights the primary challenges to effective delivery of financial education in the U.S.

The Impact of Fiscal Conservatism: A Case Study of the 2007 National Pension System Reform in Korea

Jai Seop Lee 국제금융소비자학회 2019 The International Review of Financial Consumers(IR Vol.4 No.1

This research intends to identify the influential factors in the 2007 National Pension System (NPS) reform in Korea (the Republic of Korea) which drove the NPS toward a structural transformation. This research also examines the applicability of the theory of Clemens and Cook (1999) to the Korean policy shift, who argue that the innate driving force of a policy, an internal contradiction, can be a critical source of structural policy change. A literature review based case study was carried out in this research. The findings are as follows. Firstly, rising fiscal conservatism was the main determinant of the 2007 NPS structural reform. The processes and conditions of the reform documented were: the fiscal conservatism embedded in NPS generated serious policy problems and led to an accumulation of the internal contradictions within NPS by raising the question on its fundamental policy goal. As time passed without any self-correction mechanism with respect to the problematic policy, the NPS lost credibility in the eyes of the public and also lost policy legitimacy. At the same time, there was a competing policy alternative to the NPS. This was the universalistic tax-based Basic Old-Age Pension System. This has been a challenge to NPSin that it had been designed based on the social insurance financing principle. The pre-conditions for the structural NPS reform were fully complete and they could be exploited by self-interested political parties in the following policy-making stages. Secondly, the theoretical assumption that the internal contradiction of a policy can be a decisive power for structural transformation, as suggested by Clemens and Cook (1999) among others, was proven to be theoretically and practically accurate in the Korean public pension reform case.

Financial Literacy in the US: A Robustness Check of the Lusardi-Mitchell Questions

Gianni Nicolini,Robin Henager 국제금융소비자학회 2022 The International Review of Financial Consumers(IR Vol.7 No.1

This study tested the reliability of financial literacy measures used in previous studies based on a set of items referred to as the "Lusardi-Mitchell questions". Using a sample of 514 American adults that completed a questionnaire with fifty financial literacy items, the authors compared (1) the results from a set of multivariate regression analyses that used the Lusardi-Mitchell questions to investigate the explanatory power of financial literacy on different financial behaviors, with (2) results that used alternative financial literacy measures that differ by the topic of the items or the number of the items. Doing so the paper investigate the chance that a scale based on a small number of items could not provide a precise measure of people financial literacy, due to a lack of information. Results suggest that the Lusardi-Mitchell questions provide a measure of financial literacy that is close to the results obtained using more sophisticated measures. In addition, the results supported the hypothesis that the financial literacy positively affects different financial behaviors.

Financial Frauds on Payment Cards: The Role of Financial Literacy and Financial Education

Gianni Nicolini,Lucia Leonelli 국제금융소비자학회 2021 The International Review of Financial Consumers(IR Vol.6 No.1

The growing number of payment cards issued around the world, and the growing number of transactions generated by those cards (even thanks to the e-commerce trend) have seen an increase in the relevance of financial frauds based on the use of payment cards. Negative consequences from payment card frauds do not affect only the card users, but involve sellers, financial intermediaries, and other players in the payments system. The aims of this study are (1) to assess how financial literacy can help individuals to identify and avoid financial frauds related to the use of payment cards, and (2) to assess the effectiveness of a one-shot financial education seminar to increase the ability to identify and avoid a financial scam (“fraud literacy”). Data from a sample of college students was collected in 2019 and used to address both research questions. Results support the hypothesis that financial literacy can help financial consumers to avoid being a victim of a financial fraud, even if further analysis are required. Additional results show how financial literacy is related to financial confidence, with a risk of a potential “over-confidence” effect. Results from a diff-in-diff estimation suggest that a single seminar does not improve the ability to detect financial frauds.

The Relationship among Financial Education, Financial Literacy, and Financial Behavior

Hae Kyung Yang 국제금융소비자학회 2021 The International Review of Financial Consumers(IR Vol.6 No.2

Financial education around the world has been promoted actively. However, the financial literacy level is still low, and financial illiteracy is prevalent. Evidence of the effectiveness of financial education on financial literacy and financial behaviors from previous studies are mixed. Several literature reviews and meta-analyses that discuss causal relationships of financial education, financial literacy, and financial behavior also reported mixed conclusions. Using more recent articles, we reviewed the literature to determine why a consensus has not been reached. We provide suggestions for future studies and evaluations of financial education. We further discuss the implications for policy to improve financial outcomes of individuals.

Where is the limit of Mis-selling?

Zofia Maria Mazur 국제금융소비자학회 2021 The International Review of Financial Consumers(IR Vol.6 No.1

Financial services are complex and sometimes can be difficult for even the most knowledgeable investors to understand, thus consumers are particularly susceptible to purchase the improper products which are often unethically offered by professionals. Consequently, should be avoided the situation in which professionals benefit from their inappropriate business behaviors. The serious cases of unfair conducts of financial market players have introduced and developed, for the first time in the United Kingdom, a new notion - Mis-selling, consisting of marketing and sales of financial, insurance, pension products and services to customers that do not meet their needs and financial profile. Gradually, such issue and the related legal regime was expanded and further developed in other countries. Mis-selling happens for several reasons, refers to every adult, assumes many forms, and as we could see, the financial crisis has exposed the failure of financial market regulators to identify and monitor systemic risk. The purposes of the paper are therefore to illustrate some of the professional misbehaviors, to present and compare different regulations on mis-selling and enforcement framework in Italy and in Poland and to assess their effectiveness.

Stabilize Market Sentiment to Protect Investors in the Vietnamese Stock Market

Anh Tram Luong,Thanh Trung Le,Huong Thi Thu Phung 국제금융소비자학회 2023 The International Review of Financial Consumers(IR Vol.8 No.2

With a large proportion of retail investors, the Vietnamese stock market is still heavily influenced by sentimental factors rather than fundamental factors. Therefore, the issue of stabilizing market sentiment is increasingly essential to protect investors and ensure the development of market securities. The PCA is employed to construct a sentiment index for the Vietnamese stock market. The result shows that the investor sentiment in the Vietnamese stock market has fluctuated over time. Moreover, the index reflects the impact of several political and economic events on investor sentiment in the stock market. This study summarizes policies that the government has implemented to solve objective and subjective reasons for fluctuations in investor sentiment. Moreover, this study also recommends several improvements in policies to stabilize investor sentiment and protect vulnerable investors in the Vietnamese stock market.

The Moderating Role of Fintech App Usage in Lower-Income Households in Malaysia: A Financial Well-Being Roadmap

Mohamad Fazli Sabri,Siti Shazwani Ahmad Suhaimi,Nur Shuhamin Nazuri,Amirah Shazana Magli,Nik Ahmad Suffian Burhan,Mohd. Amim Othman 국제금융소비자학회 2023 The International Review of Financial Consumers(IR Vol.8 No.2

In Malaysia, the B40 group represents households with a monthly income below MYR4,850 (USD1,093), constituting the lowest 40% of earners facing economic challenges. Amid rising living costs and employment instability, managing finances becomes crucial. Fintech apps, known for accessibility and convenience, offer various financial services. A cluster sampling strategy was used to identify 1,948 B40 households from across Peninsular and East Malaysia to serve as the study's sample population. The data was obtained through a cross-sectional study then scrutinised via SEM-PLS. This study aims to determine factors such as locus of control, financial knowledge, and financial behaviour concerning the usage of fintech apps that impact the financial well-being of Malaysian B40 households. The study findings indicate a significant positive correlation between an individual's Financial Knowledge and Locus of Control toward Malaysia B40 Financial Well-Being. The study suggests that Financial Behaviour partially mediates the relationship between Financial Knowledge, Locus of Control, and Financial Well- Being. The study also indicates that Fintech App Use moderates the relationship between Financial Knowledge, Locus of Control, and Financial Well-Being. The present study contributes to the theoretical understanding of financial well-being by investigating the mediating and moderating factors influencing this construct.

The Value of Understandable Consumer Insurance Contracts

Kyle Logue,Daniel Schwarcz,Brenda J. Cude 국제금융소비자학회 2023 The International Review of Financial Consumers(IR Vol.8 No.1

Insurance consumers, the intermediaries who serve them, and the regulators who protect them all would benefit from understandable consumer insurance contracts. This article outlines the benefits of understandable insurance contracts, identifies the regulatory tools that are or can be used to ensure such comprehensibility, and reviews the existing literature about how well consumers comprehend their insurance policies within the context of personal lines insurance in the U.S. The article concludes by proposing an empirical research strategy to study consumers’ understanding of the terms of homeowners insurance policies and, even when they have not read their policies, their expectations about coverage.