Access to Justice in Microfinance An Analytical Framework for Peru YASMIN OLTEANU
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Access to Justice in Microfinance An Analytical Framework for Peru
Yasmin Olteanu Free University Berlin (D 188) Berlin, Germany
International Publishing AG part of Springer Nature The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
This book is the culmination of a journey. Like any good journey, it was accompanied by passion and curiosity yet also drawbacks and frustrations. Although it is only my name which appears on the cover, many people have been traveling with me, and their encouragement and trust have contributed greatly. First, I would like to express my gratitude to Prof. Dr. Barbara Fritz, who with her insightful remarks, guidance and trust empowered me to turn my first research idea into a manageable venture. She consistently allowed this study to be my own work yet steered me in the right direction whenever it was needed. I am greatly appreciative for the position she offered me at the Institute for Latin American Studies and the additional funding opportunities she channeled my way. My deep-felt appreciation goes to Prof. Dr. Hansjörg Herr, who ever since I first met him in my undergraduate studies has supported me academically and personally. His constructive comments and warm encouragement lifted me through some of this journey’s lows. I would like to thank all the researchers and students, who contributed with valuable feedback and support—particularly the participants of the research colloquium on economics at the Institute for Latin American Studies. I am also deeply grateful to Prof. Dr. Claudia Gather and the members of her research colloquium at the Berlin School of Economics and Law, where I constantly received constructive and warm support and developed friendships which will last. v
I gratefully acknowledge the financial support from the Scholarship for Women in Academia, which was granted by the Berlin School of Economics and Law and funded by the Berlin Program for Equal Opportunities of Female Researchers, Artists and Teachers in Higher Education (Berliner Chancengleichheitsprogramm). The members of the selection committee of this scholarship program were the first to believe in this endeavor, and my admission to it was the tipping point which turned a mere idea into a realistic project. This study would not have been possible without the contributions of my interview partners in Washington, D.C. and Peru, and the 400 plus vulnerable financial consumers who agreed to be surveyed for this study. Their experiences, opinions and knowledge were vital for answering the research question. I would thus like to express my great thanks for the invested time, effort and trust. My deepest gratitude goes to my sisters Nadja and Sarah, and the numerous friends and colleagues who have shared the thrills and cheers along this journey. Your constant support has been invaluable to me. And most of all, I would like to thank my loving, supportive, encouraging and patient husband Johannes, whose faithful support has been vital and an invaluable pillar of strength. This book is dedicated to Prof. Dr. Straub, who during the farewell celebrations of my Master’s told me that I should consider pursuing a doctorate—and to the 26-year-old me who, at that point, thought Well, this is something I will maybe achieve in my next life.
1Introduction1 1.1 Background to the Research Problem 2 1.2 Research Objectives 4 1.3 Research Question 5 1.4 Significance of the Study 5 1.5 Structure of the Study 6 References 7 2 Theoretical Concepts9 2.1 Defining Access to Justice 9 2.2 Access to Justice and Poverty Alleviation 13 2.3 Access to Justice and Welfare Costs 16 2.4 Consumer Vulnerability 28 2.5 Consumer Complaining Behavior 34 2.6 Chapter Conclusion 40 References 43 3 Literature Survey55 3.1 Analytical Frameworks for the Analysis of Access to Justice 55 3.2 Relevant Findings on Consumer Complaining Behavior 60 3.3 Particular Access Barriers for Vulnerable Consumer Groups 68 3.4 Chapter Conclusion 70 References 72 vii
4 Methodology and Data79 4.1 Philosophical and Methodological Considerations 79 4.2 Case Study Design and Case Selection 82 4.3 Data Collection and Analysis 86 4.4 Ethical Considerations 98 4.5 A Closer Look at the Data: Descriptive Statistics 99 4.6 Chapter Conclusion 106 References 108 5 Development of the Analytical Framework111 5.1 The Path to Justice 112 5.2 Defining the Levels of Analysis 113 5.3 The Operationalization of the Micro Level of Analysis 117 5.4 Chapter Conclusion: The Analytical Framework to Evaluate the Access to Justice of Vulnerable Consumers 126 References 129 6 The Context: Peru133 6.1 Country Overview 133 6.2 The Microfinance Sector 138 6.3 The State of Financial Inclusion 152 6.4 Financial Consumer Protection 153 6.5 Chapter Conclusion 154 References 157 7 Application of the Analytical Framework163 7.1 The Macro Level: Peruvian Law and Its Implementation 163 7.2 The Meso Level: The Microfinance Sector 191 7.3 The Micro Level: Relevant Factors for the Decision to Seek Justice 210 7.4 Chapter Conclusion 269 References 276 8 Discussion of the Findings283 8.1 Access Barriers Related to the Consumer Herself 283 8.2 Access Barriers Related to the Market or the Company 285 8.3 Situational Access Barriers 288 8.4 Social Access Barriers 289
9 Conclusion and Policy Recommendations305 9.1 Main Conclusions 305 9.2 Original Contribution to Knowledge 307 9.3 Limitations of the Study 308 9.4 Implications and Areas for Further Research 310 Index317
ACP ASBANC ASOMIF BIC CCB CMAC COPEME
CRAC DCF DEFASEG EDPYME FENACREP FEPCMAC GDP
Acciòn Comunitaria del Perú (private non-profit development organization) Asociación de Bancos del Perú (Banking Association of Peru) Asociación de Instituciones de Microfinanzas del Peru (Association of Peruvian Microfinance Institutions) Schwarz’s Bayesian information criterion Consumer Complaining Behavior Caja Municipal de Ahorro y Credito (Municipal Savings and Credit Institution) Consorcio de Organizaciones Privadas de Promoción al Desarrollo de la Micro y Pequeña Empresa (Consortium of Private Organizations to Promote the Development of Small and Micro Enterprises) Caja Rural de Ahorro y Credito (Rural Savings and Credit Institution) Defensor del Cliente Financiero (Ombudsman of the Banking Association) Defensor del Asegurado (Ombudsman of the Insurance Association) Entidad de Desarollo para la Pequeña y Microempresa (Company for the Development of Small- and Microenterprise) Federación de Cooperativas de Ahorro y Crédito (Federation of Credit and Savings Cooperatives) Federación Peruana de Cajas Municipales de Ahorro y Credito (Federation of Municipal Savings and Credit Institutions in Peru) Gross Domestic Product xi
Gross National Income Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual (National Institute for the Defence of Competition and Intellectual Property) MFI Microfinance Institution MIDIS Ministerio de Desarrollo e Inclusión Social (Ministry of Development and Social Inclusion) MIMP Ministerio de la Mujer y Poblaciones Vulnerables (Ministry of Women and Vulnerable Populations) NGO Non-governmental Organization PAU Plataforma de Atención al Usuario (Consumer Platform of the SBS) PEN Peruvian Sol (Peruvian Nuevo Sol up to 2015) SAC Servicio de Atención al Ciudadano (Client Service Center of the INDECOPI) SBS Superintendencia de Banca, Seguros y Administradoras Privadas de Fondos de Pensiones (Superintendency of Banks, Insurance and Pension Fund Administrators) UIT Unidad Impositiva Tributaria (Taxation Unit) UNDP United Nations Development Program USD United States Dollar WOMWord-of-Mouth
Hirschman’s framework of Exit, Voice and Loyalty extended by Kolarska et al. (based on Hirschman 1978; Kolarska and Aldrich 1980, adapted by the author) 37 Day and Landon’s complaining behavior taxonomy extended by Day’s 1980 alteration (based on Day and Landon 1977; Day 2011, adapted by the author) 39 Barendrecht, Mulder and Giesen’s Path to Justice (based on Barendrecht et al. 2006, adapted by the author) 57 Bahdi’s Three-Component Analytical Framework for Access to Justice Research (based on Bahdi 2007, adapted by the author)58 Bedner and Vel’s Process-Oriented Analytical Framework for Access to Justice Research (based on Bedner and Vel 2010, adapted by the author) 59 Geographical distribution of the quantitative and qualitative samples100 Past problem and complaining experience in the sample: An overview102 The three respondent clusters 104 Linking the three levels of analysis to the Path to Justice 113 The categories at the macro level of the analytical framework 114 The categories at the meso level of the analytical framework 115 The dimensions at the micro level of the analytical framework 116 The Analytical Framework to Evaluate the Access to Justice of Vulnerable Consumers 128 Peru’s microfinance landscape: The supporting environment 151 xiii
List of Figures
INDECOPI: Bodies relevant for consumer protection (based on El Presidente de la Republica 2012, compiled by the author) 178 Fig. 7.2 Mediation procedure of the INDECOPI Consumer Service Center (SAC) (based on Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual 2017c, 20; adapted by the author) 180 Fig. 7.3 Complaint and allegation procedure of the consumer platform of the SBS (PAU) (based on Superintendencia de Banca, Seguros y ASP 2003, compiled by the author) 195 Fig. 7.4 The path to justice of a vulnerable financial consumer in Peru 207 Fig. 7.5 The seven identified relevant factors at the macro and meso level of analysis 209 Fig. 7.6 The level of completed education of the respondents 213 Fig. 7.7 The level of completed education and the voicing of complaints214 Fig. 7.8 The level of self-confidence of the respondents 216 Fig. 7.9 The level of self-confidence and the voicing of complaints 217 Fig. 7.10 Past satisfactory apology and future complaining intention 221 Fig. 7.11 The distribution of the index of past perceived justice 222 Fig. 7.12 Expected loss of access to financial services and the voicing of complaints 224 Fig. 7.13 The distribution of the index of awareness of rights 227 Fig. 7.14 Awareness of the right to receive clear information and the voicing of complaints 230 Fig. 7.15 The six problem clusters of vulnerable financial consumers (in % of the respondents) 234 Fig. 7.16 Internal attribution of the cause of the problem and the voicing of complaints 245 Fig. 7.17Knowledge of internal complaint mechanisms and the voicing of complaints 250 Fig. 7.18 The distribution of the index of expected justice 257 Fig. 7.19 The level of education and the probability to voice a complaint262 Fig. 7.20 The level of self-confidence and the probability to voice a complaint263 Fig. 7.21 Expected loss of access to finance and the probability to voice a complaint 264 Fig. 7.22Knowledge of internal complaint mechanisms and the probability to voice a complaint 265
List of Figures
Fig. 7.23 Fig. 7.24
Histogram of the predicted probability to voice a complaint 266 The three respondent clusters and the probability to voice a complaint267 Fig. 7.25Key findings of the analysis 270
Singh’s taxonomy of consumer complaining responses Sampling of regions Overview of sample sets used for the analyses in this study Interviewed stakeholders by stakeholder group, position, region and gender The eight guiding hypotheses at the micro level of analysis of the analytical framework The operationalized sub-hypotheses of hypothesis 1: socioeconomic indicators The operationalized sub-hypotheses of hypothesis 2: attitude toward complaining The operationalized sub-hypothesis of hypothesis 3: market characteristics The operationalized sub-hypotheses of hypothesis 4: awareness of rights The operationalized sub-hypotheses of hypothesis 5: problem typology The operationalized sub-hypotheses of hypothesis 6: knowledge of options The operationalized sub-hypotheses of hypothesis 7: perceived access barriers The operationalized sub-hypotheses of hypothesis 8: expected justice Peru’s microfinance landscape: the supply side First dimension of the micro level of analysis: hypothesis and sub-hypotheses
First dimension of the micro level of analysis: confirmed hypothesis215 Second dimension of the micro level of analysis: hypothesis and sub-hypotheses 216 The experienced perceived justice of respondents with past complaining experience 220 Second dimension of the micro level of analysis: confirmed hypotheses222 Third dimension of the micro level of analysis: hypothesis and sub-hypothesis 223 Third dimension of the micro level of analysis: confirmed hypothesis225 Overview of the awareness of rights of the respondents 226 Fourth dimension of the micro level of analysis: hypothesis and sub-hypotheses 229 Fourth dimension of the micro level of analysis: confirmed hypothesis230 Problem clusters: overview of magnitude and complaining behavior235 Fifth dimension of the micro level of analysis: hypothesis and sub-hypotheses 244 Fifth dimension of the micro level of analysis: confirmed hypothesis246 Sixth dimension of the micro level of analysis: hypothesis and sub-hypotheses 249 Sixth dimension of the micro level of analysis: confirmed hypothesis251 Seventh dimension of the micro level of analysis: hypothesis and sub-hypotheses 252 Seventh dimension of the micro level of analysis: confirmed hypothesis 253 Overview of the expected justice of the respondents 254 Eighth dimension of the micro level of analysis: hypothesis and sub-hypotheses 256 Eighth dimension of the micro level of analysis: confirmed hypothesis257 The regression equation to predict complaining behavior 261 Overview of sub-hypotheses confirmed at the micro level of analysis 269 Policy recommendations resulting from this study’s findings according to stakeholder group 315
Financial services targeting the poor and vulnerable can bring considerable opportunities yet also significant risks to financial consumers. One of these potential risks is the illegal or illegitimate treatment of these consumers and their cases by the financial institutions that, at times, are enabled by exploiting the various disadvantages which are particular to vulnerable target groups, causing substantial detriment to the whole household of the concerned client. An enabling environment for those vulnerable consumers experiencing injustice which also encourages the decision to actively seek justice is thus highly relevant and contributes to the achievement of the 16th Sustainable Development Goal by increasing their Access to Justice. The central aim of this study is to gain an in-depth understanding of the enabling and hampering aspects of the Path to Justice of a vulnerable financial consumer in Peru. The study first develops an analytical framework which enables a thorough evaluation of the Path to Justice for vulnerable consumers from an economic perspective—from the decision to seek justice to the final outcome. The framework is then applied to the case of Peruvian microfinance. A mixed-methods approach comprising quantitative and qualitative data sets collected from 18 stakeholders and 432 vulnerable financial consumers constitutes the base for the framework’s application. There are 14 factors which act as access barriers to justice for the vulnerable financial consumer in Peru. Seven of them obstruct the decision to actively seek justice: A (i) low level of education, (ii) lacking xix
self-confidence, (iii) low levels of knowledge of the right to receive clear information or (iv) of internal complaint mechanisms, the (v) expected loss of access to finance, (vi) an internal attribution of the cause of the problem and (vii) dissatisfaction with an apology received in a previous complaint procedure. Once having decided to voice a complaint, vulnerable financial consumers encounter seven additional access barriers: A (viii) partial lack of protection by the existing forums, an (ix) expected biased treatment of their cases, (x) complex procedures, (xi) high time investment, travel costs related to the (xii) lack of regional presence of the necessary institutions, the (xiii) occurrence of mal-intentioned consumer associations and a potentially (xiv) differing understanding and interpretation of justice. The results suggest a variety of policy recommendations which are specific for the case of Peru. The developed Analytical Framework to Evaluate the Access to Justice of Vulnerable Consumers can be applied to any sector or country and thus beyond this study serve researchers investigating the Access to Justice of vulnerable consumer groups in different contexts.
Resumen Los servicios financieros dirigidos a los pobres y vulnerables pueden traer considerables oportunidades, pero también riesgos importantes para los consumidores financieros. Uno de estos riesgos potenciales es el tratamiento ilegal o ilegítimo de los consumidores y sus casos por parte de las instituciones financieras que, a veces, se benefician explotando las diversas desventajas particulares para los grupos vulnerables, causando así un perjuicio sustancial a toda la familia del cliente afectado. Por lo tanto, es sumamente importante la existencia de un entorno propicio para aquellos consumidores vulnerables que experimenten injusticia, el cual aliente la decisión de buscar activamente justicia. Además, dicho ambiente contribuye a alcanzar la 16ª Meta de Desarrollo Sostenible mediante el aumento de su Acceso a la Justicia. El objetivo central de este estudio es obtener una comprensión profunda de los aspectos posibilitadores y obstaculizadores del Camino a la Justicia de un consumidor financiero vulnerable en el Perú. En el estudio primero se desarrolla un marco analítico que permite una evaluación exhaustiva del Camino a la Justicia para los consumidores vulnerables
desde una perspectiva económica - desde la decisión de buscar justicia hasta el resultado final. Luego, el marco se aplica al caso del sector de las microfinanzas en el Perú. La aplicación del marco se basa en un enfoque de métodos mixtos que comprende el análisis conjunto de datos cuantitativos y cualitativos recopilados de 18 partes interesadas y 432 consumidores financieros vulnerables. Los resultados muestran que hay 14 factores que actúan como barreras de Acceso a la Justicia para el consumidor financiero vulnerable en el Perú. Siete de ellos obstruyen la decisión de buscar justicia activamente: Un (i) bajo nivel de educación, (ii) una falta de confianza en sí mismo, (iii) bajos niveles de conocimiento del derecho a recibir información clara o de (iv) los mecanismos internos de quejas, la (v) probable pérdida de acceso a la financiación, (vi) una atribución interna de la causa del problema y (vii) insatisfacción con una disculpa recibida en un procedimiento de queja anterior. Una vez que han decidido presentar una queja, los consumidores financieros vulnerables encuentran siete barreras de acceso adicionales: A veces una (viii) falta de cubierta en absoluto por los foros existentes, la (ix) sospecha de un tratamiento sesgado, (x) procedimientos complejos, (xi) largos plazos, costos de viaje relacionados con la (xii) falta de presencia regional de las instituciones necesarias, la (xiii) existencia de asociaciones del consumidor que explotan al mismo y (xiv) interpretaciones potencialmente diferentes de la justicia. Estos resultados sugieren una variedad de recomendaciones de políticas específicas para el caso del Perú. El marco analítico desarrollado en este estudio además puede aplicarse a cualquier sector o país, y de esta forma es una nueva herramienta para investigar el Acceso a la Justicia de los vulnerables grupos de consumidores en diferentes contextos.
El Banco nunca pierde.1 (Common saying in Peru and comment of numerous vulnerable financial consumers surveyed for this study)
Financial services targeting the poor and vulnerable can bring considerable opportunities yet also significant risks to financial consumers. One of these potential risks is the illegal or illegitimate treatment of these consumers and their cases by the financial institutions that are, at times, enabled by exploiting the various disadvantages which are particular to vulnerable target groups, causing substantial detriment to the whole household of the concerned client. An enabling environment for those vulnerable consumers experiencing injustice which also fosters the decision to actively seek justice is thus highly relevant and contributes to the achievement of the 16th Sustainable Development Goal2 by increasing the Access to Justice. The central aim of this study is to gain an in-depth understanding of the enabling and hampering aspects of the Path to Justice of a microfinance client in Peru. I first will develop an analytical framework which enables a thorough evaluation of the Path to Justice for vulnerable consumers of any economic sector—from the decision to seek justice to the final outcome. The framework will then be applied to the case of Peruvian microfinance.
1.1 Background to the Research Problem For developing countries, the most vulnerable financial consumers are considered to be those who have previously been excluded from the financial system or due to their characteristics have challenges with accessing it at all (Ledgerwood and Gibson 2013). Some of the features which have been identified as tending to increase the likelihood of financial exclusion are (i) being particularly young or old (Financial Sector Deepening Kenya 2016), (ii) living in rural as opposed to urban areas (Ledgerwood and Gibson 2013), having another religion than the majority population (Harris-White 2005), belonging to an ethnic minority (Ledgerwood and Gibson 2013), being female (Johnson 2000) and living just above or below the poverty line (Hashemi and Montesquiou 2011). Among the adults who live on less than 2 USD per day, around 38% are small-holder farmers, 23% casual laborers, 19% low waged salaried, 11% microentrepreneurs and 5% fishermen or pastoralists (Wyman 2007). It is hence large and heterogeneous groups that cannot fully satisfy their needs for financial services. In the beginning, approaches aiming at financially including these societal groups primarily evolved around one product: Microcredit. Microcredits targeted microentrepreneurs and aimed to alleviate poverty by investing in and, by this, growing their economic activity. The perspective, however, has changed with the experience that the loans were frequently not used for productive business purposes but rather for consumption or other needs like, for example, school fees. The poor and vulnerable need a variety of financial services in addition to microcredit to enable them to manage their liquidity and risks. As a consequence, the diverse financial services designed for and targeting the poor or other formerly excluded groups of the society are today covered by the term microfinance. For policymakers, yet another, broader concept has gained momentum over the past years: Financial inclusion.3 While the term microfinance includes credit, savings, insurance and non-financial services offered to the defined target group in a financially sustainable way, financial inclusion is multifaceted. It comprises the access to an appropriate and affordable range of products, the effective use of this offered product range and financial consumers who are well prepared and informed so that they can make good financial decisions for their households. Financial inclusion thus deliberately puts a focus on both, sustainable operations of the providers and the clients’ interests and
protection. The concept hence can be understood as a reaction to the mission drift identified in some markets, which has resulted in increased financial and social vulnerabilities for the affected clients (Ledgerwood and Gibson 2013). The term mission drift in this context stands for a deviation from the original social and development-oriented approach towards a profit-maximizing one by those financial institutions focusing on vulnerable target clients—the so-called microfinance institutions (MFIs). A mission drift can manifest in diverse ways with one being the cutting of costs by either increasing the average loan size or decreasing outreach to disadvantaged or rural groups (Hermes and Lensink 2011).4 Another is the improvement of the financial performance by infringing basic business ethics imperatives when dealing with these vulnerable target groups (Hudon and Sandberg 2013; Serrano-Cinca and Gutiérrez-Nieto 2014). The latter has diverse implications. Some MFIs have designed products and prices that cater to their profit-maximizing activities yet do not meet the needs of their clients and in some cases even exploit their vulnerabilities (such as a lack of understanding of the concept of interest rates). Some MFIs have engaged in reckless lending and ultimately over-indebted their clients. A number of these specialized financial institutions were also found to engage in illegitimate or even illegal selling and collection practices with their clientele (Hulme and Arun 2011). These developments do not only negatively affect these vulnerable target groups but can have destabilizing effects on the financial system as a whole (Hudon and Sandberg 2013). They hence create the need for a protection of the concerned vulnerable financial consumers, which on the one hand is induced by the legal and regulatory framework and on the other by self-regulation of the involved financial institutions (Giggy and Wong 2015). In its yearly assessment of the enabling environment for financial inclusion in 55 countries, the Economist Intelligence Unit takes into account two indicators related to the protection of the clients: (i) Market-conduct rules5 and (ii) grievance redress and operation of dispute-resolution mechanisms6 (Economist Intelligence Unit 2016). In its 2016 report the legal and regulatory environment for financial client protection was found to be weak and underdeveloped in numerous developing countries. Many lack specific microfinance laws, and the existing ones frequently do not cover client protection issues or are inadequately enforced (Sluijs et al. 2014; Economist Intelligence Unit 2016). Many stakeholders have, however, endorsed the most prominent
initiative of industry self-regulation: The Smart Campaign’s Client Protection Principles. It promotes and certifies adherence to seven principles which call for (i) appropriate product design and delivery, (ii) prevention of over-indebtedness, (iii) transparency, (iv) responsible pricing, (v) fair and respectful treatment of clients, (vi) privacy of client data, and (vii) mechanisms for complaints resolution (Smart Campaign 2016). Grievance, redress and complaints mechanisms are hence considered to be relevant on both levels: The legal and regulatory framework on the one side and the codes of good conduct of the financial institutions themselves on the other. While there exist numerous studies on the other indicators, redress and complaint mechanisms have so far gotten little attention in research. The few existing studies I found merely include them as one of many aspects of client protection and most focus on the question of if respective mechanisms exist.7 One study also takes into account the quality of the respective enforcement (Makuyana 2015). The pilot study series Voice of the Client also inquires as to whether the surveyed financial consumers know and understand the existing mechanisms (MIX Market and HIVOS 2017). There is, however, a lack of research which deliberately takes into account the appropriateness of the different relevant steps and instruments for the vulnerable target group of microfinance clients.
1.2 Research Objectives This study aims to contribute to the understanding of a vulnerable financial consumer’s Path to Justice and, by doing this, to fill a part of the research gap identified above. It deliberately puts the client and her8 features, limitations and specific needs at its center. This client focus reflects the industry’s original social and development-oriented mission and enables an analysis which is centered around this vulnerable target clientele. The output of the study will be twofold: On the one hand, I will develop an analytical framework which can be used for future assessments of Access to Justice of vulnerable consumers and the respective comparisons between different countries. On the other hand, the application of this framework to the case of the Peruvian microfinance sector will allow me to draw concrete conclusions for this case and to formulate policy recommendations.
1.3 Research Question To achieve the objectives of this study, the following main research question will be addressed: Which factors contribute to or impede the Access to Justice of vulnerable financial consumers in Peru? Two guiding questions will help structuring the study. They this way ensure the main research question is answered in a comprehensive way: 1. Which factors contribute to or impede the decision to enter the Path to Justice? 2. Which factors contribute to or impede the moving along the Path to Justice?
1.4 Significance of the Study Gaining a deeper understanding of the path a vulnerable financial consumer takes when seeking justice—and of her challenges and needs when starting or continuing on the path—is important for numerous stakeholder groups: 1. First, it’s important for the financial consumer herself, as a lack of access to appropriate and effective grievance redress and complaint mechanisms can result in various disadvantages and ultimately in a refrainment from participating in and thus from benefiting from the formal financial system altogether. 2. Second, suppliers profit from redress mechanisms which are well adapted to their target clientele as this way they can learn about the dissatisfactions and grievances of their clients and take action to avoid losing them. By building up a comparatively better set-up than competitors, they can also improve their positioning on the market. 3. Third, regulators and other policymakers by establishing an effective system and continuously improving it, can reduce opportunistic behavior and thus market inefficiencies which can potentially render the market unstable. 4. Fourth, supporting organizations, funders and networks can use the findings to assess and adapt their respective actions, requirements or assistance.