income group has the highest percentage of countries with all 5 measures followed by countries in Latin America and the Caribbean.

The dataset collected through the survey provides information on a number of dimensions of financial consumer protection across countries using consistent methodology. Ideally, we would like to explore the links between the scope of financial consumer protection across countries and market outcomes, such as the level of financial access. However available data does not allow for such an investigation for a number of reasons. First, we only have a cross-country sample of data but no historical information, making it impossible to conduct any impact analysis due to endogeneity problems. Second, the specific impact of consumer protection regulations is likely to vary greatly within the economy—from individual to individual, and as such, it is best understood through micro-level studies. Consumer protection regulations may also only have an impact on a subgroup of the population, and not affect country-level statistics in a significant manner. Third, the survey mostly collected data on the nature of financial consumer protection regulations but not on whether they are implemented in practice. The data is also self-reported by the regulators. Even though we try to collect information to proxy for the effectiveness of enforcement, these measures are limited. Fourth, many of the regulations are very recent and may not have had the time yet to “work through” the system.

More importantly, there is a fundamental challenge to measuring the outcome of the financial consumer protection at the country level due to the complexity of transmission channels for this policy. One theory suggests that better consumer protection, including effective disclosure, fair treatment and reliable dispute resolution, would encourage greater use of financial services and lead to greater access to credit. This effect, however would only apply to the previously underserved groups. For the already-served groups the impact may be the opposite, where greater transparency on the available products, for example a credit card with high rates and fees, would induce clients to reduce the use of services. At the country level, the result on financial access—in terms of the number of individuals served—may be positive, negative or neutral. Another possible outcome, at least on the credit side, is better loan repayment and lower nonperforming loans, as consumers are able to better evaluate available options and avoid taking loans they are not able to repay. However, country-level data on non-performing loans is unreliable and often driven by a number of macroeconomic and institutional factors that are difficult to control for.

We have experimented with a number of composite indicators as well as testing direct correlations between each subcomponent and country level characteristics. Table 1 presents pair-wise correlations for 10 consumer protection indices using the survey data. Quantitative measures for financial consumer protection are positively and significantly correlated with one another, suggesting that once legislation is put in place, it normally covers most of the areas. Yet, the correlations between consumer protection variables and account penetration are small in 15