Misled and mis-sold: financial misbehaviour in retail banks?

Renuka Sane and Monika Halan

Journal of Comparative Economics, 2017, vol. 45, issue 3, 429-444

Abstract: We use an audit methodology where auditors ask for tax saving instruments from banks and document the disclosures made on product features at the time of sale. In private sector banks with high sales incentives, the high commission product is recommended. In public sector banks, where there are deposit mobilisation targets, fixed deposits are recommended. Banks rarely make voluntary disclosures on product features. When specifically requested, information provided is inaccurate or incomplete. Our results demonstrate the challenges of mandating disclosures when buyers have little understanding of the relevance of product characteristics, and distributors are themselves ignorant or influenced by incentives. They also raise concerns regarding private sector banking without regulatory capacity.

Keywords: Retail finance; Banks; Consumer-protection; Disclosure; Sales incentives; India (search for similar items in EconPapers)
JEL-codes: D14 D18 G21 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Misled and Mis-sold: Financial Misbehaviour in Retail Banks? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:45:y:2017:i:3:p:429-444

DOI: 10.1016/j.jce.2017.06.001

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