Publikation: Monographie

Systemic usury and the European Consumer Credit Directive

Grunddaten
Abstract
Autoren
Einrichtung

Grunddaten

Titel	Systemic usury and the European Consumer Credit Directive
Erscheinungsjahr	2019
Verlag	Universität Rostock
Verlagsort	Rostock
Serie	Thünen-series of applied economic theory ; no. 161
Auflage	Revised version Dezember 2019
Publikationsform	Elektronische Ressource
Publikationsart	Monographie
Sprache	Englisch
Letzte Änderung	20.12.2023 13:01:59
Bearbeitungsstatus	durch UB Rostock abschließend validiert
Dauerhafte URL	http://purl.uni-rostock.de/fodb/pub/70692
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Abstract

Usury is a frequent occurrence in consumer credit markets and particularly affects low-income households. Although the term usury conjures images of a greedy individual consciously acting to exploit the weak bargaining position of another by deceitful and even fraudulent means, we consider it as a systemic issue: as a problem of social discrimination, where belonging to a group which is statistically discriminated against leads to entrapment in a chain of usurious credit and financial contracts. This paper reviews the economic rationale for usury legislation and evaluates the European Consumer Credit Directive 2008/48/EC in this context. It identifies systemic usury as the product of market failure: the most powerful explanations for which are monopoly power, where the consumer is locked in a bilateral credit relationship; discrimination through risk-based pricing, and negative externalities. Contrary to the main focus of the European Consumer Credit Directive, improved disclosure of contract terms and other relevant information to consumers at the point of contracting cannot address systemic usury in credit markets. Even fully informed consumers can be discriminated against and become trapped in a situation of bilateral monopoly. As a consequence, the Directive is found to be ineffective: it implicitly acknowledges usurious practices and products as legal and undermines the national fight against usury. The Directive must be reformed.

Autoren

Neuberger, Doris
Reifner, Udo

Einrichtung

WSF/IfVWL/Geld und Kredit