The power of standardization : testing information disclosure in a multi-country study

Governments and academics have focused on financial education as a tool to improve financial wellbeing, but the efficacy of these initiatives is mixed. As an alternative to educating financial consumers, governments around the world have tried to encourage comparison shopping by introducing legislation to improve disclosure and transparency. Laboratory experiment study seeks to understand the role of disclosure formats in facilitating comparison shopping for savings and credit products by low-income consumers in Peru and Mexico. The results show that the simplified key fact statement (KFS) with its standardized format significantly improves consumer decision-making compared to the marketing materials currently provided by financial institutions. Because KFS is most useful early on during the sales visit, policymakers should take care to develop rules regarding the timing of disclosures and monitor compliance with timely disclosure of KFS through mystery shopping and other market monitoring tools.