Behavioural Finance and Consumer Loan Contracts

Fömötör, B.; Parádi-Dolgos, A.; Sipiczki, Z.

doi:10.25201/FER.16.2.156169

29 June 2017DOI: https://doi.org/10.25201/FER.16.2.156169

Author information:

Barna Fömötör: Magyar Nemzeti Bank, Director General. E-mail: fomotorb@mnb.hu

Anett Parádi-Dolgos: University of Kaposvár, Associate Professor. E-mail: dolgos.anett@ke.hu

Zoltán Sipiczki: University of Kaposvár, PhD Candidate; Pallas Athéné Domus Scientiae Foundation, PhD Candidate. E-mail: sipiczki.zoltan@ke.hu

Abstract:

Due to the situation that has emerged in the wake of retail lending, particularly foreign currency lending, every circumstance that leads to excessive systemic risks must be taken into consideration, namely the absence of consumer self-control, under- and overreactions and the risks stemming from intertemporal retail consumer decisions. The authors attempt to make consumer decisions understandable by analysing biased intertemporal models. Based on the relevant literature, the authors use a behavioural science approach to shed light using on the underlying factors of action or passivity, the factors that introduce bias into consumer rationality and their potential management, in particular asset regulation and the fair bank acts, deeper and more comprehensive regulation of legal relationships, keeping in mind not only the key interest of consumer protection, but also the predictable and sustainable long-term functioning of financial institutions.

Cite as (APA):

Fömötör, B., Parádi-Dolgos, A., & Sipiczki, Z. (2017). Behavioural Finance and Consumer Loan Contracts. Financial and Economic Review, 16(2), 156–169. https://doi.org/10.25201/FER.16.2.156169

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Column:

Essay

Journal of Economic Literature (JEL) codes:

D18, D90, L15

Keywords:

retail indebtedness, intertemporal decisions, systemic risk, regulation

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