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Title: Lender Liability in the Consumer Credit Market
Authors: Iossa, E
Palumbo, G
Keywords: consumer credit, lender liability, misperception, product failure
Issue Date: 2000
Publisher: Brunel University
Citation: Economics and Finance Working papers, Brunel University, 00-10
Abstract: In many countries consumer credit legislation provides for the extension of liability for product failure to the financial institution that advances credit to the consumer. In particular, lender liability is imposed on those credit grantors who closely operate with the supplier of the good. This paper provides a rationale for lender-responsibility in the consumer credit market. It shows that, when judicial enforcement is inefficient or there is risk of seller liquidation, lender-liability helps to protect consumers who systematically underestimate the probability of product failure and overestimate the extent to which they can obtain compensation.
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

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