Items in this collection
Now showing 1 - 2 of 2
Publication(World Bank, Washington, DC, 2010-07) Rutledge, SueUntil the financial crisis of 2007, the global economy was adding an estimated 150 million new consumers of financial services each year. Rates of increase have since slowed but the growth continues. Most new consumers are in developing countries where consumer protection and financial literacy are still in their infancy. This is particularly true in countries that have moved from central planning to market economies where protecting consumers is necessary to ensure stable and competitive financial markets and give new consumers confidence in the formal financial systems. The global financial crisis has highlighted the importance of consumer protection and financial literacy for the stability of the financial sector. In the US, the rapid growth of complex residential mortgage products, combined with securitized instruments which were sold to poorly informed parties, has caused much turmoil. Financial institutions worldwide have been obliged to write off trillions of dollars of assets. In Europe and Central Asia (ECA) too, damage to the financial sector was serious.
Publication(World Bank, Washington, DC, 2009-12) Rutledge, SueOver the last decade, consumer credit in the Russian Federation has expanded from almost nothing to 9.2 percent of Gross Domestic Product (GDP) in 2008. This is an average increase of 84 percent a year for five years. Recent developments in financial markets have highlighted the need for consumer protection and financial literacy for the long-term health of the financial sector. The rapid growth of household lending has been accompanied by an increase in the number of households that have difficulty in understanding the risks and obligations that they assume, or the full range of choices available. In the United States mortgage markets for instance, complex financial contracts were sold to borrowers, some of whom had weak credit histories. The consequences were disastrous, and highlight the importance of consumer protection and financial education to prevent other similar events.