Competition and Consumer Protection in the Romanian Banking Sector

Abstract

This study highlights the relationship between the competitive environment in the domestic banking sector and the protection of consumers’ rights and interests. The research is focused on three areas: analysis of the competitive environment, based on detailed analysis of the degree of concentration, the average interest rate spread on loans and deposits, and clients’ mobility; analysis of the distribution and causes of the complaints made by consumers of banking products and services; the correlation between the bank's market share and the number of complaints registered by it, using the ranks difference correlation nonparametric Spearman's test. The results of the analysis highlighted a strong and direct relationship between the competitive position of the bank and the number of the complaints it registered, proving that the competitive environment in the banking sector does not ensure the real protection of consumers’ rights and interests. Considering the results of the research, we proposed at the end of the study, clear and consistent measures in order to: improve the consumers’ financial literacy; reduce information asymmetry and stimulate competition in the banking sector; increase consumers’ trust in the financial sector; generate beneficial and sustainable effects.

Keywords

• competition
• consumer protection
• banking sector
• Herfindahl-Hirschman Index
• client mobility
• complaint
• Spearman’s correlation coefficient.