Most of the kinds of brand new directory also a detailed dysfunction try showed for the Table 3, lower than

The next declaration is the Commission’s Study from the expenses and you may Advantages of different Plan Options for Home loan Credit (European Percentage, 2009, select specifically Annex B: Courtroom Explanations)

To check on the main hypothesis your to early payment increases the interest rate give within banks’ borrowing from the bank rate and you can lending rates in the a formal fashion, i basic created a buyers safeguards index. The fresh new directory categorizes places according to the form of settlement, if any, that people must pay to their loan providers if they want to pay off their mortgage loans until the contractual deadline. The categorical index variable ranges about lowest quantity of user shelter Become negotiated = 0 on the higher number of consumer security No charge = 2.

Here i requested brand new main banking institutions, ministries of fund of your User Claims and you may financial or individual safeguards connections regarding applicable number of individual coverage in their respective places

Our very own list classifies the newest rules ruling early cost throughout European union Associate States between 2006 and you may 2016 to the thirty day period-to-day base. Locate information about just what legislation governed early repayments at which point in time for the confirmed nation, we mark away from several sources. A study conducted of the European Percentage within its effort so you’re able to harmonize the fresh new Western european home loan areas, gained more information for the federal mortgage , come across especially users 5581). Out of this research you will find taken details about the latest legal regimes ruling very early payments in the European union Affiliate Says from inside the 2006. This research accumulated investigation to your degrees of user shelter to have premature repayments in ’09. Yet not, both records have generally qualitative information on this new federal coverage levels. I hence set up our own class scheme to quantify such investigation and you will then followed a double-blind coding processes. Ultimately, in the 2016 i used an age-send questionnaire to get our personal number one research. The consumer security index you to lead from your class exercising is demonstrated in the Table cuatro, lower than.

Based on our very own Individual Security List i created one or two in another way coded explanatory variables. This type of details were used in our very own statistical activities to test the newest hypothesis that more stringent user security laws contributes to large attract price spreads within banks’ borrowing from the bank rates and lending costs. All of our very first, main changeable ‘s the Consumer Defense getting Very early Installment (Dummy) changeable. While the conveyed by the the title, this adjustable was good dummy that requirements the initial category of all of our directory Settlement with the bank should be negotiated otherwise damages must be paid because 0 and all of other kinds, i.elizabeth. Liability cap otherwise lender’s extra management expenses just and you may No charge as the step 1. The explanation behind so it coding is the fact that the site group represents those individuals regions hence implement the default signal used in bargain laws to possess a breach out-of a buyers mortgage price. This new changeable codes as step 1 most of the countries one to diverge out of this standard code and rather prescribe a top necessary defense height to own individual mortgage agreements. Which dummy is therefore a traditional and you may legitimate way of measuring this new user cover levels having very early repayments regarding additional Associate Claims. I make use of the dummy varying in our chief mathematical models, as we consider it getting the most likely size to test all of our lookup theory.

Our very own 2nd adjustable ‘s the Consumer Coverage to possess Very early Cost (Categorical) adjustable. This categorical changeable comes with the same coding just like the individual shelter directory lead above. In comparison to the dummy adjustable, this is the way more finely grained and you will complex measure. Off a legal views, the fresh new adjustable are less reputable, when we thought that multilinguistic, multijurisdictional ecosystem of one’s European union loans in Limon produced the fresh new relative legislation efforts about what the programming would depend a challenging activity. In addition, brand new variety of observations for each and every category is actually faster healthy compared to the latest dummy variable. We hence make use of this changeable to possess a general robustness test. In any case, the outcomes that people received which have one another details is in line with both.