Competition and Consumer Protection in the Romanian Banking Sector
Author:Viorela Iacovoiu and Adrian Stancu
JEL:D18, G21, G28
DOI:
Keywords:competition, consumer protection, banking sector, Herfindahl-Hirschman
Index, client mobility, complaint, Spearman’s correlation coefficient.
Abstract:
This study highlights the relationship between the competitive environment in the domestic
banking sector and the protection of consumers’ rights and interests. The research is
focused on three areas: analysis of the competitive environment, based on detailed analysis
of the degree of concentration, the average interest rate s pread on loans and deposits, and
clients’ mobility; analysis of the distribution and causes of the complaints made by
consumers of banking products and services ; the correlation between the bank's market
share and the number of complaints registered by it, using the ranks difference correlation
nonparametric Spearman's test.
The results of the analysis highlighted a strong and direct relationship between the
competitive position of the bank and the number of the complaints it registered, proving
that the competitive environment in the banking sector does not ensure the real protection
of consumers’ rights and interests .
Considering the results of the research, we proposed at the end of the study, clear and
consistent measures in order to: improve the consumers’ financial literacy; reduce
information asymmetry and stimulate competition in the banking sector; increase
consumers’ trust in the financial sector; generate beneficial and sustainable effects .