Access to Justice in Microfinance - An Analytical Framework for Peru

Acknowledgements

Contents

Acronyms

List of Figures

List of Tables

Chapter 1 Introduction

1.1 Background to the Research Problem

1.2 Research Objectives

1.3 Research Question

1.4 Significance of the Study

1.5 Structure of the Study

References

Chapter 2 Theoretical Concepts

2.1 Defining Access to Justice

2.1.1 Philosophical Approach

2.1.2 Legal Approach

2.1.3 Sociological Approach

2.1.4 Public Management Approach

2.1.5 How This Research Study Defines Access to Justice

2.2 Access to Justice and Poverty Alleviation

2.2.1 Defining Poverty

2.2.2 Lacking Rule of Law Fosters Poverty

2.2.3 Access to Justice: A Capability

2.3 Access to Justice and Welfare Costs

2.3.1 Welfare and the Role of the Public Sector

2.3.2 Market Failure in the Neoclassical Framework

2.3.2.1 Externalities

2.3.2.2 Imperfect Competition

2.3.2.3 Information Asymmetries

2.3.2.4 The Role of Transaction Costs for Market Failure

2.3.3 The Behavioral Market Failure

2.3.3.1 Inertia and Procrastination

2.3.3.2 Framing and Presentation

2.3.3.3 Social Influences

2.3.3.4 Faulty Assessment of Probabilities

2.3.3.5 Behavioral Market Failures and Paternalistic Consumer Protection

2.4 Consumer Vulnerability

2.4.1 Defining the Consumer

2.4.2 Defining Consumer Vulnerability

2.4.3 The Vulnerable Consumer in Economic Theory

2.4.4 The Vulnerable Consumer on Financial Markets

2.4.4.1 Information Vulnerability

2.4.4.2 Pressure Vulnerability

2.4.4.3 Supply Vulnerability

2.4.4.4 Impact Vulnerability

2.4.4.5 Redress Vulnerability

2.5 Consumer Complaining Behavior

2.5.1 Oliver: The Disconfirmation Paradigm

2.5.2 Hirschman: Exit, Voice and Loyalty

2.5.3 Singh: Taxonomy of Consumer Complaining Behavior Responses

2.5.4 Day and Landon: Complaining Behavior Taxonomy

2.5.5 Other Contributions to Consumer Complaining Behavior Theory

2.6 Chapter Conclusion

References

Chapter 3 Literature Survey

3.1 Analytical Frameworks for the Analysis of Access to Justice

3.1.1 Barendrecht, Mulder and Giesen’s Path to Justice

3.1.2 Bahdi’s Three-Component Analytical Framework

3.1.3 Bedner and Vel’s Process-Oriented Analytical Framework

3.2 Relevant Findings on Consumer Complaining Behavior

3.2.1 Factors Related to the Consumer Herself

3.2.1.1 Socioeconomic Indicators

3.2.1.2 The Attitude Toward Complaining

3.2.1.3 The Prior Complaining Experience

3.2.1.4 The Frequency of Purchase

3.2.2 Factors Related to the Market and the Company

3.2.2.1 Marketplace Factors

3.2.2.2 The Consumer’s Attributions

3.2.2.3 The Perceived Approachability of the Company

3.2.3 Situational Factors

3.2.3.1 The Type of the Product or Problem Encountered

3.2.3.2 The Dimension of the Problem

3.2.3.3 The Grade of Dissatisfaction

3.2.3.4 The Perceived Justice

3.3 Particular Access Barriers for Vulnerable Consumer Groups

3.3.1 Social Access Barriers

3.3.2 Cost-Related Access Barriers

3.3.3 Cultural Access Barriers

3.4 Chapter Conclusion

References

Chapter 4 Methodology and Data

4.1 Philosophical and Methodological Considerations

4.2 Case Study Design and Case Selection

4.2.1 Strengths and Limitations of Single Case Studies

4.2.2 Case Selection: Peru as a Critical Case

4.2.3 Analytical Framework

4.3 Data Collection and Analysis

4.3.1 Quantitative Data and Analysis

4.3.1.1 Population and Sample

4.3.1.2 Instrumentation

4.3.1.3 Analysis

4.3.1.4 Reliability and Validity

4.3.2 Qualitative Data and Analysis

4.3.2.1 Participants

4.3.2.2 Instrumentation

4.3.2.3 Analysis

4.3.2.4 Trustworthiness and Authenticity

4.3.3 Integration of Qualitative and Quantitative Data

4.4 Ethical Considerations

4.5 A Closer Look at the Data: Descriptive Statistics

4.5.1 Describing the Quantitative Data

4.5.2 Describing the Qualitative Data

4.6 Chapter Conclusion

References

Chapter 5 Development of the Analytical Framework

5.1 The Path to Justice

5.2 Defining the Levels of Analysis

5.2.1 The Macro Level of Analysis

5.2.2 The Meso Level of Analysis

5.2.3 The Micro Level of Analysis

5.3 The Operationalization of the Micro Level of Analysis

5.3.1 Socioeconomic Indicators

5.3.2 The Attitude Toward Complaining

5.3.3 Market Characteristics

5.3.4 Awareness of Rights

5.3.5 Problem Typology

5.3.6 Knowledge of Options

5.3.7 Perceived Access Barriers

5.3.8 Expected Justice

5.4 Chapter Conclusion: The Analytical Framework to Evaluate the Access to Justice of Vulnerable Consumers

References

Chapter 6 The Context: Peru

6.1 Country Overview

6.1.1 The Peruvian Geography, Demography, Government and Economy

6.1.2 A Historical Perspective on the Peruvian Political and Economic Situation

6.1.3 Microenterprises in the Peruvian Economy

6.1.4 A Definition of the Vulnerable Financial Consumer for Peru

6.2 The Microfinance Sector

6.2.1 The Broader Picture: Microfinance in Latin America

6.2.1.1 The History of Microfinance in Latin America

6.2.1.2 Characteristics that Coin Latin American Microfinance

Putting the Focus on the Financial Performance

Targeting the Economically Active Poor

Operating in Urban Settings

Using the Individual Lending Approach

Tapping National and International Financial Markets and Collecting Savings

Well-Developed Regulatory and Legal Framework

6.2.2 The Development of the Microfinance Sector in Peru

6.2.3 The Peruvian Microfinance Sector Today

6.2.3.1 A Definition of Microfinance for Peru

6.2.3.2 The Peruvian Microfinance Landscape

6.3 The State of Financial Inclusion

6.4 Financial Consumer Protection

6.5 Chapter Conclusion

References

Chapter 7 Application of the Analytical Framework

7.1 The Macro Level: Peruvian Law and Its Implementation

7.1.1 International Law and Treaties

7.1.2 National Law

7.1.3 The Internal Forum: The Complaints Book

7.1.3.1 Policy and Procedures of the Complaints Book

7.1.3.2 Access Barriers to the Complaints Book

7.1.4 Sector-Independent Third-Party Forums to Claim Justice

7.1.4.1 Consumer Associations

Policy and Procedures of Consumer Associations

Access Barriers to Consumer Associations

7.1.4.2 National Institute for the Protection of Competition and for the Protection of Intellectual Property

Policy and Procedures of the INDECOPI

Access Barriers to the INDECOPI

7.1.4.3 Judicial Process

Policy and Procedures of the Judicial Process

Access Barriers to the Judicial Process

7.1.5 Macro Level: Conclusion

7.2 The Meso Level: The Microfinance Sector

7.2.1 Sector-Specific Legal and Regulatory Framework

7.2.2 Sector-Specific Third-Party Forums to Claim Justice

7.2.2.1 The Consumer Platform of the SBS

Policy and Procedure of the Consumer Platform

Access Barriers to the Consumer Platform

7.2.2.2 AlóBanco of the Banking Association

Policy and Procedures of AlóBanco

Access Barriers to AlóBanco

7.2.2.3 Ombudsman of the Banking Association (DCF)

Policy and Procedures of the DCF

Access Barriers to the DCF

7.2.2.4 Ombudsman of the Insurance Association (DEFASEG)

Policies and Procedures of the DEFASEG

Access Barriers to the DEFASEG

7.2.3 Meso Level: Conclusion

7.2.4 Interim Chapter Conclusion: The Typical Path to Justice of a Vulnerable Financial Consumer in Peru

7.3 The Micro Level: Relevant Factors for the Decision to Seek Justice

7.3.1 The First Dimension: Socioeconomic Characteristics

7.3.2 The Second Dimension: The Attitude Toward Complaining

7.3.3 The Third Dimension: Market Characteristics

7.3.4 The Fourth Dimension: Awareness of Rights

7.3.5 The Fifth Dimension: Problem Typology

7.3.5.1 An Overview of the Problems Experienced by the Respondents

Problem Cluster 1: Problems Related to Perceived Unfair (but Legal) Practices

Problem Cluster 2: Problems Related to Credit Bureau, Guarantor and Collateral

Problem Cluster 3: Problems Related to the Interest

Problem Cluster 4: Problems Related to Fees and Credit Cards

Problem Cluster 5: Problems Related to Collection Practices

Problem Cluster 6: Problems Related to Lack of Information

7.3.5.2 Testing the Fifth Dimension’s Hypothesis

7.3.6 The Sixth Dimension: Knowledge of Options

7.3.7 The Seventh Dimension: Perceived Access Barriers

7.3.8 The Eighth Dimension: Expected Justice

7.3.8.1 An Overview of the Level of Expected Justice of the Respondents

7.3.8.2 Testing the Eighth Dimension’s Hypothesis

7.3.9 Using the Results to Predict Complaining Behavior

7.3.9.1 Calculation of the Logistic Regression

7.3.9.2 Interpretation of the Logistic Regression

Level of Education

Level of Self-Confidence

Expected Loss of Access

Level of Knowledge of Internal Complaint Mechanisms

Quality of the Model

7.3.9.3 Conclusion: Added Value of the Logistic Regression for the Analysis

7.3.10 Micro Level: Conclusion

7.4 Chapter Conclusion

7.4.1 Access Barriers Related to the Consumer Herself

7.4.2 Access Barriers Related to the Market or the Company

7.4.3 Situational Access Barriers

7.4.4 Social Access Barriers

7.4.5 Cost-Related Access Barriers

7.4.6 Cultural Access Barriers

References

Chapter 8 Discussion of the Findings

8.1 Access Barriers Related to the Consumer Herself

8.1.1 Level of Education

8.1.2 Attitude Toward Complaining

8.2 Access Barriers Related to the Market or the Company

8.2.1 Lack of Protection by Complaint Mechanisms

8.2.2 Expected Loss of Access to Finance

8.2.3 The Attribution of the Cause of the Problem

8.3 Situational Access Barriers

8.3.1 Expected Biased Treatment

8.4 Social Access Barriers

8.4.1 Lacking Awareness of the Right to Receive Clear Information

8.4.2 Lack of Knowledge of Internal Complaint Mechanisms

8.5 Cost-Related Access Barriers

8.5.1 Complexity of Complaint Mechanisms

8.5.2 Time Investment into a Complaint

8.5.3 Lack of Regional Presence of Some Third-Party Complaint Mechanisms

8.5.4 Occurrence of Opportunistic Consumer Associations

8.6 Cultural Access Barrier

8.6.1 Diverting Perspectives on Justice

8.7 Chapter Conclusion

8.7.1 This Study and Cartwright’s Dimensions of Vulnerability

8.7.2 This Study and Hirschman’s Framework of Exit, Voice and Loyalty

8.7.3 This Study and Neoclassical Market Failure

8.7.4 This Study and the Behavioral Market Failure

8.7.5 Implications for Welfare and Poverty

References

Chapter 9 Conclusion and Policy Recommendations

9.1 Main Conclusions

9.2 Original Contribution to Knowledge

9.3 Limitations of the Study

9.3.1 Limitations of the Developed Analytical Framework

9.3.2 Limitations of the Findings for the Case of Peru

9.4 Implications and Areas for Further Research

Index