Access to Justice in Microfinance An Analytical Framework for Peru YASMIN OLTEANU Palgrave Studies in Impact Finance Edited by Mario La Torre Palgrave Studies in Impact Finance Series Editor Mario La Torre Sapienza University of Rome Rome, Italy The Palgrave Studies in Impact Finance series provides a valuable scientific ‘hub’ for researchers, professionals and policy makers involved in Impact finance and related topics It includes studies in the social, political, environmental and ethical impact of finance, exploring all aspects of impact finance and socially responsible investment, including policy issues, financial instruments, markets and clients, standards, regulations and financial management, with a particular focus on impact investments and microfinance Titles feature the most recent empirical analysis with a theoretical approach, including up to date and innovative studies that cover issues which impact finance and society globally More information about this series at http://www.palgrave.com/gp/series/14621 Yasmin Olteanu Access to Justice in Microfinance An Analytical Framework for Peru Yasmin Olteanu Free University Berlin (D 188) Berlin, Germany Palgrave Studies in Impact Finance ISBN 978-3-319-95323-6 ISBN 978-3-319-95324-3  (eBook) https://doi.org/10.1007/978-3-319-95324-3 Library of Congress Control Number: 2018947407 © The Editor(s) (if applicable) and The Author(s) 2018 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Cover illustration: Zoonar GmbH/Alamy Stock Photo This Palgrave Macmillan imprint is published by the registered company Springer International Publishing AG part of Springer Nature The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Acknowledgements 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 vi    Acknowledgements 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 Contents 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 Theoretical Concepts 2.1 Defining Access to Justice 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 Literature Survey 55 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 viii    Contents Methodology and Data 79 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 Development of the Analytical Framework 111 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 The Context: Peru 133 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 Application of the Analytical Framework 163 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 Discussion of the Findings 283 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 Contents    8.5 Cost-Related Access Barriers 8.6 Cultural Access Barrier 8.7 Chapter Conclusion References ix 291 295 296 300 Conclusion and Policy Recommendations 305 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 Index 317 308  Y OLTEANU barriers, cannot access grievance, redress or complaint mechanisms Eliminating these access barriers would cater to the achievement of the 16th Sustainable Development Goal by increasing vulnerable consumers’ Access to Justice As for every research study, these contributions, however, underlie certain limitations which will be clearly outlined in the next section 9.3  Limitations of the Study In addition to the limitations which apply to this study’s methodological approach to the data collection and its analysis, which have been discussed in detail in Chapter 4, the following ones apply to the contributions produced by this study In order to clearly outline these confines, I differentiate between those applicable to the analytical framework and those related to the findings of its application to Peru 9.3.1   Limitations of the Developed Analytical Framework The application of the analytical framework to Peru and the subsequent analysis have resulted in an extensive understanding of the current state of Access to Justice of vulnerable financial consumers in Peru The framework has in this context proven to be adequate to answer this study’s research question and to deliver valuable insights into those factors which contribute to or impede from accessing justice It is set up to easily be adapted to a variety of settings and situations and enables a comparison of the state of Access to Justice of different analyzed markets or sectors Two limitations of the framework were identified in the course of this study It, on the one hand, provides a static view of the examined case without taking into account potential changes in Access to Justice over time The conclusion that the identified access barriers translate into a lack of capability and thus into a higher level of poverty might, for example, be limited if a considerable number of access barriers had just been eliminated by public policy intervention, which would substantially improve the access to this capability On the other hand, the framework, by covering numerous aspects and concepts, could be considered to oversimplify the data collection resulting in potentially lost insight In this study, some of the concepts or respective scale-items of the quantitative analysis had, for practical reasons, only been covered by one question 9  CONCLUSION AND POLICY RECOMMENDATIONS  309 in the respective questionnaire For some of them, a more multifaceted assessment would have been ideal, especially in those cases for which the macro or meso levels of analysis suggest significance which then is not confirmed at the micro level (which applies to the expected justice and the access barriers related to transaction costs) 9.3.2   Limitations of the Findings for the Case of Peru In addition, the findings which were presented and discussed in the previous chapters also underlie limitations, the most relevant of them being restricted generalizability: 1. The applied single case study approach has produced very specific results which strongly depend on and interact with the particular context of the examined case With Peru being considered a leader in the enabling environment for Access to Justice of vulnerable financial consumers, the application of the framework to other cases or countries can be expected to result in other and potentially more pronounced identified access barriers 2. As data was only collected in three regions, also the generalization of the findings for the whole country is limited The structured sampling of three heterogeneous regions that was aimed at cannot be expected to have completely outweighed this The fact that vulnerable financial consumers and experts of 22 of the country’s regions did not contribute to this study’s data set must thus be interpreted as a limitation for its generalizability 3. The collection of data in only urban settings, in addition, results in the quantitative data set not adequately covering the rural vulnerable financial consumers As a consequence, the findings might only be partly generalizable to include this consumer group 4. Lastly, the cooperation with only one formal microfinance institution and the resulting data collection on the street in front of its branches surely means there’s a limitation of the quantitative data set The partnering microfinance institution, however, represents a typical formal one in the Peruvian microfinance sector, serving a broad range of clients from small informal microentrepreneurs up to small-sized formal businesses The loan amounts the respondents have taken out in the past 12 months reflect the heterogeneity of the surveyed group: They cover loans below PEN 1000 310  Y OLTEANU (305 USD) and go beyond amounts of PEN 10,000 (3050 USD) I thus deem the findings generalizable to the clients of other formal microfinance institutions in the sector and in a similar context These presented limitations to generalizability do, however, not mean that the findings of this study are not transferable at all A transfer of a finding can still be valid if the differences in the contexts are carefully thought through and their influence on the conclusions of this study is cautiously considered Another key limitation of this study concerns the statistical analysis: The causality of the relationships could not be evaluated with the chosen methods but was deducted from theoretical concepts and relevant previous empirical findings This approach results in causalities which reflect theory and empirics of my discipline and I thus deem them well grounded However, any causalities not mirroring the reality would not have been identified in this study Lastly, the data did not contain client input on the macro and meso level of analysis of the analytical framework Ideally, qualitative interviews with vulnerable financial consumers who have been on the Path to Justice would have completed the study and its method-mix 9.4  Implications and Areas for Further Research This study found that even in a market which is considered a leader for Access to Finance for vulnerable consumer groups, there are several barriers which can hamper access As a consequence and with the aim of moving the resulting inefficient market equilibrium toward efficiency, policy interventions targeting the reduction of these access barriers are an important implication of its results and should be expedited The self-confidence of the consumer was identified as a relevant enabling personal factor for Access to Justice However, it is very difficult to be influenced by policy intervention The same applies to the identified social costs a complaint can cause with the complainer’s environment and peers Most of the below recommendations which target the other identified access barriers can, however, be expected to also affect the level of self-confidence and the social approval of complaining of the respective target group One important step would be to increase the vulnerable consumers’ financial capabilities, especially those relevant for redress-seeking by 9  CONCLUSION AND POLICY RECOMMENDATIONS  311 the SBS It in the past has successfully managed to integrate financial education into school curriculums This study’s findings suggest enhancing these programs by including relevant information on the voicing of dissatisfaction Furthermore, respective programs targeting the adult population and particularly the female one with low levels of education would be recommendable Consumers should have a clear understanding of their obligations and especially their rights toward the financial institution they transact with They should also be aware that even if the cause of the problem lies with them (as, e.g in the case of a delayed payment), the financial institution cannot engage in illegitimate or illegal behavior, and they have the right to complain if this is the case The current efforts of the INDECOPI—which diffuses the knowledge of the first step of the internal complaint procedure (the complaints book)—could be enhanced by also including this knowledge in the SBS’s agenda of financial capability training In addition, vulnerable financial consumers should have applicable knowledge on the entry point of at least one third-party mechanism which can give support if the internal procedure does not lead to a satisfactory solution For the Peruvian case, it is recommendable to promote the INDECOPI as an external mechanism due to its easy and cost-free access and most wide-ranging coverage In addition, the SBS can play an important role in the continued provision of relevant information to vulnerable consumer groups Market information on providers and available products on the financial market should be actively promoted with this target group in order to decrease the fear of losing access to these services caused by a complaint The SBS publishes the interest rates of all regulated financial institutions online and regularly in the newspapers, enabling readers to see an overview of the supply side This might, however, not be appropriate for the vulnerable target group and improved Another continued stream of information could tackle the consumers’ faulty negative assessment of their probabilities to succeed induced by, for example, negative past experiences or the expectation of a biased treatment This could be achieved by providing better-adapted and reachable information on the respective decision rates (e.g on small claims) Currently, the percentage of claims which were decided on in the favor of the client by the regulated financial institutions is communicated on the institution’s website and by the SBS in regular reports and on the website The third-party mechanisms by the INDECOPI and the SBS publish them separately in regular reports and online The industry-run third-party mechanisms only disclose this information on their 312  Y OLTEANU respective websites These various sources are not appropriate and make it difficult and confusing for the vulnerable clientele to access this information and to evaluate if the chosen mechanism could be biased A unified communication channel on all third-party mechanisms which adapts to the target clients’ realities would hence be recommendable Specific research could identify the most adequate and effective way to convey this information Lastly, those financial institutions deliberately increasing the complexity, the time needed or physical barriers to their internal complaint mechanisms (by, for example, letting the respective clients wait or sending them to other branches) should be identified and reported on The SBS includes basic checks on the respective compliance in their inspections I suggest attempting to enhance these checks by using mystery shoppers who, by taking the dissatisfied client’s role, can perform a deeper and more realistic assessment The INDECOPI should ensure no group of vulnerable financial consumers is excluded from the provided mechanisms This especially concerns those microentrepreneurs who not pass the three applicable filters of the INDECOPI and, as a result, can only turn to industry-owned mechanisms or the judicial system The three-filter system should thus be carefully revised and adapted if needed In addition, those consumer associations qualifying for cooperation with the INDECOPI and thus can be registered with it should be beyond any doubt working in the interest of their vulnerable clientele The approval criteria might thus have to be revised A firm procedure should be introduced enabling a direct follow-up on any indication of misconduct and an exclusion of these associations from the work with the INDECOPI The policy to punish the individual consumer for mal-intentioned complaints handed in by a consumer association should be abolished in order to enable the effective handling of these suspicious cases Also, the complaint mechanisms themselves should be improved by taking into account the specific needs and challenges of the vulnerable target groups In the Peruvian context, there are two authorities responsible for the respective regulations: The INDECOPI and the SBS These two institutions should in cooperation tackle the following challenges: 1. The complexity of complaint mechanisms should be adapted to the most vulnerable groups of consumers, this way avoiding barriers caused by, for example, having to describe the situation in writing or on a computer Specific research could indicate the 9  CONCLUSION AND POLICY RECOMMENDATIONS  313 most convenient way of voicing dissatisfaction for these consumer groups 2. The time investment in a complaint procedure should continuously be reduced, especially for vulnerable groups (potentially indicated by low claim amounts) Although in Peru both the internal and the external complaint mechanisms follow a defined and relatively brief timeline and several complaint mechanisms offer a fast lane for small claims, the needed time seems to still be considered as too much by many vulnerable financial consumers Others might not be aware that these timelines exist Targeted information campaigns should thus inform these consumer groups about the duration, by doing this increasing awareness and accessibility 3. The regional presence of third-party complaint mechanisms should be further fostered while taking into account the necessities of consumer groups who, to a large extent, not live in the town’s centers and have to spend money to get there The INDECOPI and the SBS organize and participate in events outside of their premises (for example at schools and trade fairs), but not focus on serving vulnerable consumers this way To considerably increase the access to their services for this group of consumers, they could send client advisors of the INDECOPI1 to defined vulnerable communities on a regular basis These representatives of the complaint mechanisms should have the authority to advise consumers and register official complaints In addition to the suggestions above, the industry networks can also contribute to an increased Access to Justice The industry-run thirdparty mechanisms (AlóBanco and the ombudsmen of the Banking and the Insurance Association) have eminently high access barriers for the vulnerable clientele, among them the lack of participation of most of those financial institutions particularly serving the vulnerable I thus recommend making the participation in these mechanisms obligatory for all institutions in the respective networks As a second step, time and complexity of the process should be reduced and the regional coverage increased The networks should also foster and guide the respective self-regulation of their members and support efforts aiming at better serving the dissatisfied vulnerable clientele Lastly, microfinance and other financial institutions serving vulnerable consumers should be interested in their clients’ feedback and satisfaction 314  Y OLTEANU with their services because of their social mission, their reputation and because of the financial advantages of serving returning customers They should thus communicate that complaints are welcome and not constitute a risk of consumers being excluded from their services in the future Loan officers or client advisors should inform their clients well about their rights and give them practical and applicable information on how to initiate a complaint if needed Legitimate complaints should always provoke a genuine apology Table 9.1 gives an overview of the policy recommendations by stakeholder group Along with the findings and the resulting implications described above, this study identified a number of interesting areas for further research: 1.  The application of the analytical framework to rural vulnerable financial consumers in Peru 2. An application of the framework to differently defined vulnerable consumer groups such as internal migrants, the displaced or the handicapped in Peru 3. A more thorough analysis of cultural identity and its effects on consumer complaining behavior in Peru 4.  The application of the analytical framework to other sectors in Peru 5.  An analysis of alternative responses to dissatisfaction in the Peruvian microfinance sector: Exit loyalty or neglect 6. The application of the analytical framework to the microfinance sectors of other countries, this way enabling comparisons 7. A more detailed analysis of the knowledge of rights of vulnerable financial consumers, of the expected justice and of transaction costs and their role for Access to Justice (by collecting more specific data points) 8. A thorough analysis of social transaction costs 9. Several behavioral economic study set-ups aiming at identifying the sources for the identified irrational decision-making of dissatisfied financial consumers and, subsequently, research on which policy measures would overcome these biases To conclude, financial institutions serving vulnerable consumers can drift from their original mission toward profit-maximizing comportment 9  CONCLUSION AND POLICY RECOMMENDATIONS  315 Table 9.1  Policy recommendations resulting from this study’s findings according to stakeholder group Stakeholder SBS Policy Recommendations ϭ /ŶĐůƵĚĞƌĞĚƌĞƐƐͲƌĞůĞǀĂŶƚŝŶĨŽƌŵĂƟŽŶŝŶĮŶĂŶĐŝĂůĐĂƉĂďŝůŝƚLJƚƌĂŝŶŝŶŐ Ϯ ŶŚĂŶĐĞƚƌĂŝŶŝŶŐ ƚŽĂĚƵůƚƉŽƉƵůĂƟŽŶǁŝƚŚůŽǁůĞǀĞůƐŽĨĞĚƵĐĂƟŽŶ ϯ /ŶĐůƵĚĞƌŝŐŚƚƐĂŶĚŽďůŝŐĂƟŽŶƐƚŽǁĂƌĚƐĮŶĂŶĐŝĂůŝŶƐƟƚƵƟŽŶŝŶƚƌĂŝŶŝŶŐ ϰ hŶĚĞƌůŝŶĞƚŚĂƚĐŽŵƉůĂŝŶƚĐĂŶĂůƐŽďĞĮůĞĚ͕ŝĨŽƌŝŐŝŶĂůĐĂƵƐĞŽĨƚŚĞƉƌŽďůĞŵŝƐ ĂƩƌŝďƵƚĞĚƚŽĐůŝĞŶƚŚĞƌƐĞůĨ ϱ &ƵƌƚŚĞƌ ĚŝƐƐĞŵŝŶĂƚĞĂƉƉůŝĐĂďůĞŬŶŽǁůĞĚŐĞŽĨƚŚĞĐŽŵƉůĂŝŶƚƐŬĂŶĚƚŚĞĞŶƚƌLJ ƉŽŝŶƚƚŽƚŚĞ/EKW/ ϲ WƌŽǀŝĚĞĂƉƉƌŽƉƌŝĂƚĞŝŶĨŽƌŵĂƟŽŶŽŶƐƵƉƉůLJƐŝĚĞĂĐƚŽƌƐĂŶĚƉƌŝĐĞƐ ϳ WƌŽǀŝĚĞĂƉƉƌŽƉƌŝĂƚĞŝŶĨŽƌŵĂƟŽŶŽŶƐƵĐĐĞƐƐƌĂƚĞƐǁŝƚŚĞdžŝƐƟŶŐĨŽƌƵŵƐ ϴ WƌŽǀŝĚĞĂƉƉƌŽƉƌŝĂƚĞŝŶĨŽƌŵĂƟŽŶŽŶĮŶĂŶĐŝĂůŝŶƐƟƚƵƟŽŶƐĚĞůŝďĞƌĂƚĞůLJŝŶĐƌĞĂƐŝŶŐ ƚŚĞĂĐĐĞƐƐďĂƌƌŝĞƌƐƚŽũƵƐƟĐĞ ϵ hƐĞŵLJƐƚĞƌLJƐŚŽƉƉĞƌƐƚŽĐŚĞĐŬƚŚĞĐŽŵƉůŝĂŶĐĞŽĨĮŶĂŶĐŝĂůŝŶƐƟƚƵƟŽŶƐǁŝƚŚ ƌĞƐƉĞĐƟǀĞƌĞŐƵůĂƟŽŶƐĂŶĚůĂǁ ϭϬ INDECOPI ϭϭ ϭϮ SBS & INDECOPI Industry Networks Microfinance and other Financial Institutions ZĞǀŝƐĞƚŚĞƚŚƌĞĞͲĮůƚĞƌƐLJƐƚĞŵĂƉƉůŝĐĂďůĞƚŽŵŝĐƌŽĞŶƚƌĞƉƌĞŶĞƵƌƐĂĚĚƌĞƐƐŝŶŐƚŚĞ /EKW/ ZĞǀŝƐĞĂĚŵŝƐƐŝŽŶĐƌŝƚĞƌŝĂĨŽƌĐŽŶƐƵŵĞƌĂƐƐŽĐŝĂƟŽŶƐƚŽƚŚĞ/EKW/ĂŶĚ ĞƐƚĂďůŝƐŚĂŶĞīĞĐƟǀĞĞdžĐůƵƐŝŽŶŽĨŵĂůŝĐŝŽƵƐŽŶĞƐ;ďLJĂƉƉůLJŝŶŐƚŚĞƉĞŶĂůƚLJĨŽƌ ŵĂůͲŝŶƚĞŶƟŽŶĞĚĐŽŵƉůĂŝŶƚƐŶŽƚƚŽƚŚĞĞŶĚĐůŝĞŶƚďƵƚƚŽƚŚĞƌĞƐƉŽŶƐŝďůĞ ĐŽŶƐƵŵĞƌĂƐƐŽĐŝĂƟŽŶͿ ĞƩĞƌĐŽŵŵƵŶŝĐĂƚĞƚŚĞĞdžŝƐƟŶŐƟŵĞůŝŶĞƐĨŽƌŝŶƚĞƌŶĂůĂŶĚĞdžƚĞƌŶĂůĐŽŵƉůĂŝŶƚ ŵĞĐŚĂŶŝƐŵƐ ϭϯ &ƵƌƚŚĞƌ ƌĞĚƵĐĞĐŽŵƉůĞdžŝƚLJĂŶĚƟŵĞŝŶǀĞƐƚŵĞŶƚĨŽƌŝŶƚĞƌŶĂůĂŶĚĞdžƚĞƌŶĂů ŵĞĐŚĂŶŝƐŵƐ ϭϰ /ŶĐƌĞĂƐĞƉŚLJƐŝĐĂůƉƌĞƐĞŶĐĞŽĨƚŚŝƌĚͲƉĂƌƚLJŵĞĐŚĂŶŝƐŵƐ;ƐĞŶĚƌĞƉƌĞƐĞŶƚĂƟǀĞƐŝŶƚŽ ƚŚĞƌĞƐƉĞĐƟǀĞĐŽŵŵƵŶŝƟĞƐͿ ϭϱ dƵƌŶƚŚĞƉĂƌƟĐŝƉĂƟŽŶŝŶƚŚĞŶĞƚǁŽƌŬ͛ƐƚŚŝƌĚͲƉĂƌƚLJŵĞĐŚĂŶŝƐŵƐŽďůŝŐĂƚŽƌLJ ϭϲ ZĞĚƵĐĞƚŚĞĞŵŝŶĞŶƚƟŵĞĂŶĚĐŽŵƉůĞdžŝƚLJŽĨƚŚĞƚŚŝƌĚͲƉĂƌƚLJŵĞĐŚĂŶŝƐŵƐ ϭϳ /ŶĐƌĞĂƐĞƚŚĞǀĞƌLJůŝŵŝƚĞĚƉŚLJƐŝĐĂůƉƌĞƐĞŶĐĞŽĨƚŚĞƚŚŝƌĚͲƉĂƌƚLJŵĞĐŚĂŶŝƐŵƐ ϭϴ &ŽƐƚĞƌĂŶĚŐƵŝĚĞƌĞƐƉĞĐƟǀĞƐĞůĨͲƌĞŐƵůĂƟŽŶŽĨŵĞŵďĞƌƐ ϭϵ ŶƐƵƌĞƉƌŽƉĞƌĐŽŵŵƵŶŝĐĂƟŽŶŽĨƚŚĞŝƌƌŝŐŚƚƐĂŶĚŽďůŝŐĂƟŽŶƐƚŽƚŚĞĐůŝĞŶƚƐ ϮϬ WƌŽǀŝĚĞƉƌĂĐƟĐĂůĂŶĚĂƉƉůŝĐĂďůĞŝŶĨŽƌŵĂƟŽŶŽŶǁŚĂƚƚŽĚŽŝŶĐĂƐĞŽĨ ĚŝƐƐĂƟƐĨĂĐƟŽŶ Ϯϭ džƉƌĞƐƐƚŚĂƚĐŽŵƉůĂŝŶƚƐ ĂƌĞǁĞůĐŽŵĞĂŶĚĚŽŶŽƚůĞĂĚƚŽĂĚŝƐƌƵƉƟŽŶŽĨƚŚŝƐ ďƵƐŝŶĞƐƐƌĞůĂƟŽŶƐŚŝƉ ϮϮ KīĞƌĂŐĞŶƵŝŶĞĂƉŽůŽŐLJƚŽĐŽŶƐƵŵĞƌƐǁŝƚŚůĞŐŝƟŵĂƚĞĐŽŵƉůĂŝŶƚƐ 316  Y OLTEANU The resulting opportunistic behavior can induce an exploitation of their vulnerable target group and cause substantial detriments to the concerned households These consumers need to be protected by being provided with Access to Justice that is free of any barriers Free access enables them to fully exercise their consumer sovereignty—a crucial condition for an efficient market and one of the targets of the 16th Sustainable Development Goal An appropriate protection of these consumers also redirects the perspective on the needs and challenges of vulnerable societal groups—the perspective which was inherent in the origins of the global movement of financial inclusion This dissertation wants to contribute to this task by presenting an analytical framework which enables an in-depth assessment of the Access to Justice of vulnerable consumers and the identification of their respective access barriers The developed framework can be applied to a variety of sectors and settings, enabling other researchers studying Access to Justice to draw from it and produce comparable results This study applied the framework to the case of Peru, and by this aimed at closing a knowledge gap and at adding to the understanding of the particular situation of vulnerable financial consumers in this country The findings shall enable stakeholders to develop suitable measures to avoid a lack of Access to Justice that harms vulnerable financial consumers and their families and that produces welfare costs and poverty Note 1. Given that the Consumer Platform of the SBS will soon withdraw from direct interaction with consumers of the financial market and only become active, if the INDECOPI informs them of a potential breach of law or regulation, this recommendation only refers to the INDECOPI (see Sect 6.4) Index A access barrier, 16, 60, 68–71, 85, 107, 114, 115, 124, 125, 163, 171–173, 175, 182–191, 196, 197, 199, 201–205, 251–254, 268, 270–274, 283, 285, 286, 288–292, 294, 295, 297–300, 308–310, 313, 316 Access to Justice, 1, 4–6, 9–13, 15, 16, 23, 28, 40–42, 55–59, 68, 70, 71, 81, 82, 85, 106, 112, 114, 115, 121, 124–128, 163–167, 176, 177, 189, 191, 266, 267, 269, 276, 291, 299, 305, 307–310, 313, 314, 316 Alóbanco, 197–199, 201, 202, 204, 206, 275, 285, 288, 292, 313 analytical framework, 1, 4, 6, 32, 41, 42, 55, 56, 58–60, 70, 71, 82, 85, 90, 95, 97, 106, 107, 111, 112, 114–117, 121, 126–128, 163, 205, 206, 210, 219, 229, 245, 249, 251, 257, 268, 269, 274, 307, 308, 310, 314, 316 Analytical Framework to Evaluate the Access to Justice of Vulnerable Consumers, 4, 6, 71, 82, 106, 112, 126, 128, 163, 269, 307, 316 attitude toward complaining, 26, 60–62, 64, 71, 107, 116, 118, 119, 215, 219, 271, 284, 290, 297, 305 attribution, 62–64, 71, 123, 245, 246, 258, 272, 287, 296, 298, 305, 306 awareness of rights, 107, 115, 121, 122, 211, 225–227, 229, 291, 305 B Bahdi’s Three-Component Analytical Framework, 55, 56, 58, 70, 112 Banking Association, 150, 193, 197–202, 204, 208, 271, 285, 286, 292, 297 Barendrecht, Mulder and Giesen’s Path to Justice, 55, 57, 70, 112 © The Editor(s) (if applicable) and The Author(s) 2018 Y Olteanu, Access to Justice in Microfinance, Palgrave Studies in Impact Finance, https://doi.org/10.1007/978-3-319-95324-3 317 318  Index Bedner and Vel’s Process-Oriented Analytical Framework, 55, 58, 59, 71 behavioral market failure, 17, 23, 27, 298 biased treatment, 209, 272, 288, 289, 296–299, 306, 311 C Capability approach, 14 Cartwright’s five dimensions of vulnerability, 32, 42, 283 case selection, 82, 84 client, 1–7, 20, 21, 28, 29, 59, 69, 85–88, 90, 94, 96, 98, 99, 105, 106, 115, 122, 137, 140–143, 146, 148, 150–154, 156, 166, 168–172, 174, 175, 181, 182, 184, 185, 190–192, 194, 197– 204, 210, 214–219, 223, 224, 227, 228, 231–233, 236–244, 247, 248, 252–255, 287, 297, 298, 306, 307, 309–314 complaining behavior taxonomy, 34, 38, 39 complaints book, 167–169, 171, 172, 183, 189, 190, 193, 206, 248, 273–275, 311 complexity, 21, 27, 32, 125, 171, 172, 183, 185, 188–191, 209, 251, 252, 270, 273, 291, 293, 296–298, 312, 313 consumer, 1–7, 9, 15, 17–19, 21–36, 38–42, 55, 56, 58, 60–69, 71, 81, 82, 85, 92, 93, 99–101, 103, 104, 106, 111–117, 119–124, 126–128, 133, 137, 138, 153– 157, 163, 166–210, 212, 214, 215, 218–220, 223–232, 234, 237–249, 251–255, 257, 258, 260, 262–266, 268–273, 275, 283–300, 305–314, 316 consumer associations, 63, 168, 173, 179, 185, 190, 273, 293, 294, 297, 298, 312 consumer complaining behavior, 9, 34, 35, 37, 38, 40, 42, 61, 64, 65, 67, 68, 111, 123, 125, 283 consumer platform, 154, 169, 190, 194, 196 consumer vulnerability, 9, 28–30, 295 cost-related access barriers, 68, 69, 273, 286, 291 cultural access barriers, 68–71, 271, 273, 294, 295 customer, 16, 21, 28, 29, 35, 168, 171, 192, 198, 214–216, 314 D Day, R.L., 34–36, 38–40, 42, 43, 60, 63, 65, 67, 111, 129 descriptive statistics, 90, 99, 106, 121, 210, 211 dimension of the problem, 60, 65, 66, 71, 122, 123, 245 E Exit, Voice and Loyalty, 34, 35, 37, 283, 285, 293, 297 expected justice, 39, 71, 107, 116, 125–127, 211, 253, 254, 256, 257, 268, 272, 276, 288, 309, 314 expected loss of access, 120, 223, 224, 258, 261, 263, 264, 268, 269, 272, 286, 305 external complaint mechanisms, 28, 193, 246, 275, 313 externalities, 17, 18, 21, 23, 41, 111 Index   319 F factors related to the consumer herself, 60 factors related to the market and the company, 60, 62 faulty assessment of probabilities, 24, 26, 41, 285, 287, 289, 294, 299 financial consumer protection in Peru, 203 financial costs, 15, 69, 124, 125, 188, 205, 251, 252, 297 financial inclusion in Peru, 84, 85, 133, 151 financial markets, 9, 20, 32, 141, 143, 155 first fundamental theorem of welfare economics, 16, 17, 41, 111, 299 forums, 59, 71, 114, 115, 154, 155, 163, 167, 172, 173, 189, 191, 199, 209, 285, 288, 297, 299 framing, 24, 25, 41 frequency of purchase, 61, 62, 71 187–191, 194, 196–201, 204, 206, 208, 215, 218, 228, 236, 238, 240, 243, 247–249, 251– 253, 255, 271–275, 285, 286, 288, 292, 296, 297, 311–313, 316 inertia, 24, 41, 291, 298 information asymmetries, 17, 19–21, 31, 32, 41, 111, 166, 189, 203, 206, 284, 287, 290, 291, 295 information vulnerability, 32, 33, 283, 289–291, 294–296 instrumentation, 88, 94 integration of qualitative and quantitative data, 97 internal complaint mechanisms, 85, 124, 152, 247, 249, 250, 258, 264, 268, 272, 291, 297, 298, 305, 312 international law and treaties, 57, 163, 164 interpretation of justice, 295 G grade of dissatisfaction, 60, 65, 66, 71 J judicial process, 183, 186–189, 191, 200, 206, 209 H Hirschman, A.O., 13, 19, 34–36, 41, 42, 63, 65, 116, 120, 123, 124, 210, 285, 287, 288, 290, 294, 307 I impact vulnerability, 33, 292, 294, 296 imperfect competition, 17–19, 21, 23, 41, 111, 286, 287 INDECOPI, 154, 155, 157, 166–169, 172, 173, 175–178, 180–185, K knowledge of options, 115, 123, 124, 211, 246, 305 L lack of protection, 209, 271, 285, 297 Landon, E.L., 34, 35, 38–40, 42, 60, 62, 65, 67, 111, 129 legal and regulatory framework, 3, 4, 192, 273, 295 level of awareness of rights, 121, 225 320  Index level of education, 32, 61, 89, 103, 117, 197, 213–215, 258, 262, 267–269, 271, 283, 296, 305 level of knowledge of internal complaint mechanisms, 250, 264, 268, 272, 305 level of self-confidence, 215–217, 222, 258, 263, 268, 285, 305, 306, 310 limitations, 4, 6, 23, 31, 80, 86, 92, 138, 142, 266, 299, 308–310 logistic regression, 91, 97, 106, 259, 260, 265, 267, 271, 272, 276, 306 M macro level of analysis, 97, 114 mal-intentioned consumer associations, 190 market characteristics, 107, 116, 119, 120, 223, 286, 305 market failure, 9, 11, 16, 17, 20, 21, 23, 27, 28, 41, 42, 111, 283, 286, 287, 290, 291, 295, 299, 307 marketplace factors, 63, 71 meso level of analysis, 97, 98, 113, 114, 119, 205, 270, 274, 310 microenterprises in the Peruvian economy, 136 microfinance, 1–4, 7, 20, 21, 29, 86, 88, 90, 93, 94, 96, 98, 99, 101, 104, 106, 107, 114, 115, 127, 133, 137–148, 150, 151, 155, 168, 170–172, 174, 175, 181, 182, 185, 188, 191, 197, 199, 210, 223, 224, 227, 228, 241– 244, 269, 297, 309, 313, 314 microfinance in Latin America, 138, 140 microfinance in Peru, 86, 106, 148 micro level of analysis, 90, 93, 97, 98, 113, 117, 121, 127, 182, 211, 225, 246, 253, 257, 271, 272, 276 mission drift, mixed-methods approach, 79, 81, 106 N National Institute for the Protection of Competition and for the Protection of Intellectual Property, 104, 154, 155, 166, 176 See also INDECOPI national law, 71, 114, 163, 165, 167, 189 O Oliver’s Disconfirmation Paradigm, 34 ombudsman, 193, 199–204, 208, 285 operationalization, 60, 71, 85, 92, 112, 117 original contribution to knowledge, 283, 307 P Pareto-optimality, 19, 111 participants, 80, 87–91, 93, 99, 100, 117, 139, 212, 213, 225, 246, 251, 252 paternalistic consumer protection, 27 Path to Justice, 1, 4–6, 55, 56, 112, 113, 115, 126, 163, 205–207, 209, 210, 268, 271, 274, 300, 305, 306, 310 perceived access barriers, 115, 124, 125, 251–254, 268 perceived approachability of the company, 62, 64, 120, 290, 291 Index perceived justice, 66, 67, 119, 126, 216, 219, 220, 222, 226, 270 Peru, 1, 5, 6, 42, 71, 79, 81, 84, 86, 101, 112, 118, 119, 127, 128, 133–137, 144–153, 155, 163–168, 175, 186, 188, 189, 196, 205–207, 229, 247, 257, 274, 299, 300, 305, 307–309, 313, 314, 316 Peruvian microfinance landscape, 148 policy recommendations, 4, 112, 165, 314, 315 population and sample, 86 poverty alleviation, 9, 13, 14, 16, 42, 145 predict complaining behavior, 257, 261 pressure vulnerability, 32, 33, 288, 296 prior complaining experience, 61, 62, 71 problem, type of, 239, 244 Problem typology, 121, 123, 230, 231, 305 Problems related to collection practices, 232, 234, 235, 241 Problems related to credit bureau, guarantor and collateral, 234, 235, 237 Problems related to fees and credit cards, 234, 235, 239 Problems related to the interest, 234, 235, 239 Problems related to lack of information, 234, 235, 242 Problems related to perceived unfair (but legal) practices, 234–236 procrastination, 24, 41, 298 product, type of, 65, 71 psychological stress, 253 public policy, 16, 18, 19, 28, 299, 308   321 Q qualitative data and analysis, 93 quantitative data and analysis, 86 R redress vulnerability, 32, 33, 42, 284, 286–288, 290, 292, 294–296 regional presence, 209, 269, 273, 292, 297, 306, 313 rule of law, 10, 12, 14, 43, 59 S Sen's capability approach, 14 Singh, J., 34, 37, 38, 40, 42, 62, 64, 66, 116, 119, 284, 290 single case study, 79, 82–84, 86, 106, 127, 309 situational factors, 31, 60, 65, 270 social access barriers, 68, 272, 289, 291 social influences, 24, 26, 41, 285, 287, 298 socioeconomic indicators, 60, 61, 71, 116–118 Superintendency of Banks, Insurance and Pension Funds Administrators (SBS), 138, 146–148, 150, 152– 155, 169, 170, 189, 192–194, 196, 200, 203, 204, 208, 238, 240, 249, 251, 273, 310, 311, 313 supply vulnerability, 33, 286, 296 T Taxonomy of complaining behavior responses, 37 time investment, 89, 125, 172, 184, 185, 188, 189, 191, 197, 209, 322  Index 251, 252, 254, 273, 291, 292, 306, 313 transaction costs, 22–24, 33, 41, 124, 284, 289, 292, 296, 298, 309, 314 Typical Path to Justice of a Vulnerable Financial Consumer in Peru, 163 V vulnerable financial consumers in Peru, 5, 42, 71, 81, 112, 299, 300, 308, 314 W welfare costs, 9, 12, 18–20, 27, 28, 41, 287, 299, 316 welfare economics, 16, 17, 41, 111, 299 ... 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. .. Concepts 2.1 Defining Access to Justice 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... 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