Comparing the development of consumer microcredit market in Europe. Finland and Russia.
Lim, Elizaveta (2017)
Lim, Elizaveta
Haaga-Helia ammattikorkeakoulu
2017
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2017060211980
https://urn.fi/URN:NBN:fi:amk-2017060211980
Tiivistelmä
Consumer microcredit is a type of financial services that is easy to access. Over the past decade it has gained popularity among people who are unable to get financing through banks. The study investigates phenomena of consumer microcredit and payday loans in Finland and Russia. It studies the problems wide spread of fast loan services has caused for borrowers. It reveals microcredit background and how it has developed to present time. It gives an overview of different types of microcredit service providers in Finland and Russia.
The research gives an analysis of legislation and amendments made to it over the past few years in Finland and Russia. It analyzes the scope of government regulation and control in both countries and gives an overview of different types of governmental and non-governmental organizations, which supervise microcredit markets. The amendments overlooked by this study cover maximum interest rate limit, overdue debt interest rate limit, customer due diligence, consumer protection during overdue debt collection process.
The empirical part of research utilizes a collection of secondary sources and primary sources in a form of an interview. It gives an overview of market players’ opinions on legislation’s effectiveness and limitations it brought for service providing and debt collection. The study also covers competition in the market and borrowers’ customer behavior change over the years. It narrates companies’ point of views on the future of microcredit market. Further the study analyses statistical data and compares the results to market players’ expectations.
The study shows that consumer microcredit has contributed to a significant portion of consumer indebtedness, involving high overdue interest payments and court related costs for borrowers. New regulations have decreased level of indebtedness caused by payday loans in Finland, while in Russia it remained almost unchanged with a tendency to increase in the future. Regulations have eliminated small companies from the market in both countries. Market players believe that it will get harder for them to continue their operations with the law getting stricter in the future. Competition among remaining service providers will get tougher as they are going to expand their operations. Some borrowers benefit from new regulations, getting better protection against unlawful actions by creditors. For other ones the regulations mean a loss as they are deprived of the last financing option they could access.
The research gives an analysis of legislation and amendments made to it over the past few years in Finland and Russia. It analyzes the scope of government regulation and control in both countries and gives an overview of different types of governmental and non-governmental organizations, which supervise microcredit markets. The amendments overlooked by this study cover maximum interest rate limit, overdue debt interest rate limit, customer due diligence, consumer protection during overdue debt collection process.
The empirical part of research utilizes a collection of secondary sources and primary sources in a form of an interview. It gives an overview of market players’ opinions on legislation’s effectiveness and limitations it brought for service providing and debt collection. The study also covers competition in the market and borrowers’ customer behavior change over the years. It narrates companies’ point of views on the future of microcredit market. Further the study analyses statistical data and compares the results to market players’ expectations.
The study shows that consumer microcredit has contributed to a significant portion of consumer indebtedness, involving high overdue interest payments and court related costs for borrowers. New regulations have decreased level of indebtedness caused by payday loans in Finland, while in Russia it remained almost unchanged with a tendency to increase in the future. Regulations have eliminated small companies from the market in both countries. Market players believe that it will get harder for them to continue their operations with the law getting stricter in the future. Competition among remaining service providers will get tougher as they are going to expand their operations. Some borrowers benefit from new regulations, getting better protection against unlawful actions by creditors. For other ones the regulations mean a loss as they are deprived of the last financing option they could access.