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An economic analysis of the EU commission's proposal for a new Consumer Credit Directive: Offering consumers more protection or restricting their options?

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  • Kösters, Wim
  • Paul, Stephan
  • Stein, Stefan

Abstract

Although the aims of the proposed new CCD are positive, the current draft is unlikely to help to fulfil them. The regulations that are intended to protect consumers seem to work against their interests. They would not make the market more transparent or effective, increase the level of protection, or harmonise legislation throughout the EU. Instead, the proposals (which are well intended but excessive) would weaken the spirit of competition on both the supply and demand sides. Consumer protection with a proper degree of moderation would involve regulation that strikes a balance between the consumer's (1) justified right to protection, (2) obligation to act responsibly and (3) right to self-determination instead of schoolmarmish government intervention. It will become more important to enable consumers to protect themselves. This can only be achieved by providing them with appropriate advice and information; bank regulation is the wrong policy instrument for this.

Suggested Citation

  • Kösters, Wim & Paul, Stephan & Stein, Stefan, 2004. "An economic analysis of the EU commission's proposal for a new Consumer Credit Directive: Offering consumers more protection or restricting their options?," RWI Materialien 9, RWI - Leibniz-Institut für Wirtschaftsforschung.
    • Handle: RePEc:zbw:rwimat:9
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    1. Kleimeier, Stefanie & Sander, Harald, 2000. "Regionalisation versus globalisation in European financial market integration: Evidence from co-integration analyses," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 1005-1043, June.
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    4. Dean M. Maki, 2000. "The growth of consumer credit and the household debt service burden," Finance and Economics Discussion Series 2000-12, Board of Governors of the Federal Reserve System (U.S.).
    5. Hung, Fu-Sheng & Cothren, Richard, 2002. "Credit market development and economic growth," Journal of Economics and Business, Elsevier, vol. 54(2), pages 219-237.
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    1. Augurzky, Boris & Engel, Dirk & Krolop, Sebastian & Schmidt, Christoph M. & Terkatz, Stefan, 2004. "Insolvenzrisiken von Krankenhäusern - Bewertung und Transparenz unter Basel II: Eine Analyse aktueller und zukünftiger Ratings von deutschen Krankenhäusern und Handlungsoptionen zu deren Verbesserung," RWI Materialien 15, RWI - Leibniz-Institut für Wirtschaftsforschung.

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