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Financial (dis-)information : evidence from an audit study in Mexico, Volume 1
 
Author:Gine, Xavier; Martinez Cuellar, Cristina; Mazer, Rafael Keenan ; Country:Mexico;
Date Stored:2014/06/03Document Date:2014/06/01
Document Type:Policy Research Working PaperSubTopics:Financial Literacy; Access to Finance; Emerging Markets; Banks & Banking Reform; Insurance & Risk Mitigation
Language:EnglishRegion:Latin America & Caribbean
Report Number:WPS6902Collection Title:Policy Research working paper ; no. WPS 6902Paper is funded by the Knowledge for Change Program (KCP)
Volume No:1  

Summary: An audit study was conducted in peri-urban Mexico to understand the quality of information and products offered to low-income potential customers. Trained auditors visited multiple financial institutions seeking credit and savings products. Consistent with Gabaix and Laibson (2006), staff voluntarily provides little information about avoidable fees, especially to auditors trained to reveal little knowledge about the market. In addition, clients are almost never offered the cheapest product, most likely because staff is incentivized to offer more expensive products that are thus more profitable to the institution. This suggests that disclosure and transparency policies may be ineffective if they undermine the commercial interest of financial institutions.

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