The Impact of Borrower Characteristics on the Effectiveness of Small Loan Regulation in Australia

Abstract

This article argues that regulation to protect consumers of small amount credit in Australia should be informed by common or likely personality characteristics of that consumer group. In this article we consider some possible dominant personality characteristics of small loans borrowers and explore the impact that those characteristics might have on the effectiveness of current Australian regulation pertaining to small amount consumer and enterprise loans. While the focus of this article is on Australian regulation, it may also be of some interest to those exploring comparable regulatory regimes in other jurisdictions. It is suggested in the conclusion to this article that empirical research should be conducted to test this hypothesis, and also to ascertain whether there are different consistent dominant personality characteristics pertaining to small consumer loan borrowers, as compared with small amount enterprise borrowers, which warrant particular regulatory approaches. If not, then consideration should be given to extending a number of the protections currently afforded to consumer borrowers to enterprise borrowers, who potentially face many of the same issues.