Next statement ‘s the Commission’s Learn from the costs and you may Benefits of the many Rules Choices to possess Financial Credit (Western european Percentage, 2009, discover specifically Annex B: Legal Descriptions)

To evaluate the head theory your right to early repayment increase the pace bequeath between the banks’ credit price and you can credit rates when you look at the an even more formal manner, i very first built a consumer safeguards index. Brand new list classifies regions with regards to the variety of settlement, if any, you to users payday loans Southern Ute reviews must pay on the lenders if they decide to pay its mortgages until the contractual deadline. Our categorical list variable selections from the lowest amount of individual defense To be negotiated = 0 into higher quantity of consumer safety No charge = 2.

Right here we requested the central finance companies, ministries regarding financing of the Representative Claims and you may bank or individual protection associations concerning the relevant amount of consumer safety within respective regions

All of our directory categorizes the latest laws and regulations ruling early payment in all European union Representative States anywhere between 2006 and you may 2016 towards 1 month-to-month base. To get details about what legislation governed very early repayments of which time within the a given nation, i draw of multiple supplies. A study held of the Western european Commission as an element of their effort in order to harmonize the newest European financial places, achieved more information towards the national financial , look for particularly profiles 5581). From this data you will find drawn information regarding brand new legal regimes ruling early repayments about European union User States inside 2006. This research obtained research towards degrees of user shelter to possess premature costs in 2009. Although not, one another profile have mainly qualitative information regarding the fresh new federal cover account. I for this reason set-up our personal classification design in order to measure these types of studies and you may implemented a dual-blind coding process. In the long run, inside 2016 we held an age-post survey to get our very own top investigation. The user defense list you to definitely lead from your classification exercise is exhibited when you look at the Desk 4, lower than.

According to all of our Individual Safety Index we authored two in different ways coded explanatory variables. These parameters were chosen for the statistical models to check on the hypothesis that more stringent individual security laws and regulations causes high notice price spreads within banks’ borrowing costs and you may credit rates. Our earliest, chief varying is the Individual Protection having Early Payment (Dummy) variable. Just like the expressed because of the the name, that it changeable are a dummy one rules the initial category of our very own directory Compensation for the financial need to be negotiated otherwise injuries have to be paid since the 0 as well as other categories, i.e. Responsibility cap or lender’s additional administrative expenditures simply and you will No charge just like the step 1. The explanation about it coding is the fact that resource group represents those people places hence apply new standard signal included in package law getting a violation out-of a consumer home loan deal. This new changeable rules because the 1 every regions that diverge from this default code and you may rather recommend a top required safety peak to have consumer home loan deals. It dummy is actually for this reason a traditional and you can reputable measure of the brand new user safeguards profile to have early payments throughout the different User Says. We use the dummy variable within fundamental analytical designs, as we consider it becoming the most appropriate measure so you can take to the research theory.

Our 2nd changeable is the Consumer Defense to own Very early Installment (Categorical) variable. So it categorical variable contains the exact same programming since individual coverage list lead above. When compared to the dummy adjustable, it is the much more finely grained and you can advanced level. Off a legal point of view, new variable are reduced legitimate, whenever we believe that multilinguistic, multijurisdictional environment of European union produced this new relative rules energy on which the coding would depend a difficult task. Additionally, this new variety of observations for every single class is actually quicker well-balanced compared to new dummy adjustable. I therefore use this changeable to have a broad robustness sample. Nevertheless, the results that individuals obtained that have one another parameters is actually in line with one another.