 Consumer rights and banking contractsPhilipp Bagus and David Howden Journal of Banking Regulation, 2023, vol. 24, issue 1, No 7, 105-114 Abstract: Abstract Survey evidence regularly shows that bank customers view bankers as less ethical or honest than other professions. This article sheds light on one potential origin of these misgivings that has been until now unaddressed. The legal system endows certain rights to banks without altering the duties obliged of depositors. By categorizing rights according to their corresponding duties we show that a conflict exists between: (1) depositors with an on-demand right to their deposited sum, and (2) depositories (banks) that are given the legal right to make use of these deposited funds at any time. Using a legal-economic analysis, we demonstrate that the latter right held by the bank is misplaced. Rectifying this erroneous assignment of rights removes the conflict apparent in the contract. Clarifying banking rights also aids in avoiding many of the misunderstandings seemingly inherent in the banking industry. Addressing this legal inconsistency removes one source of ire directed at bankers during banking crises. Keywords: Consumers; Financial institutions; Property rights; Ethics; Financial crisis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:jbkreg:v:24:y:2023:i:1:d:10.1057_s41261-021-00185-x Ordering information: This journal article can be ordered from DOI: 10.1057/s41261-021-00185-x Access Statistics for this article Journal of Banking Regulation is currently edited by Dalvinder Singh More articles in Journal of Banking Regulation from Palgrave Macmillan |
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