Personal Loan Companies in Poland: Does Empirical Evidence Justify Regulatory Transition?

Andrzej Cwynar, Wiktor Cwynar, Kamil Wais and Radoslaw Parda

Prague Economic Papers, 2017, vol. 2017, issue 4, 377-396

Abstract: We surveyed representative sample of 1,004 adult Poles to check the extent to which they distinguish among the entities operating in the market for personal loans in Poland, how they perceive loans and lending entities, and what is their knowledge on lending/borrowing issues. Particularly, we were interested in getting the insight into the fragment of the market that is operated by personal loan companies, with special emphasis on the profile of the average (statistical) borrower. Our examination was motivated by the controversies surrounding the law amendment started in Poland in 2015 in order to regulate the fraction of the consumer credit market represented by personal loan companies. By utilizing logistic and multivariate linear regression models with variables obtained from our survey, we tested whether the legal reform was well-informed and well-addressed. We found that Polish households have serious problems with distinguishing various entities that provide loans to private individuals and that such problems manifest even greater problem of material shortcomings in Poles' debt literacy. We also evidenced low public trust to lending entities, particularly to loan companies. In the light of the findings the law amendment is well-grounded, however it should be supported by actions aimed at enhancing households' financial literacy.

Keywords: personal loan companies; market for personal loans; lending regulations; public trust in lending entities; debt literacy (search for similar items in EconPapers)
JEL-codes: G21 G23 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.18267/j.pep.627

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