Certain types of consumer credit and alternative distribution channels may increase the risk of over-indebtedness, as they tend to be associated with less than fully adequate creditworthiness assessments or opaque contractual terms and conditions. This paper analyses consumer credit in Italy, focusing for the first time on specific types of credit - salary-backed loans (Cessioni del Quinto dello Stipendio, CQS) and revolving loans - and distribution channels (financial promoters, merchants and all remote channels).
The analysis shows that banks that are more involved in consumer credit have significantly lower levels of bad loans, with the exception of CQS and revolving loans. Banks that use alternative channels more often have lower capital levels and higher bad loans and operating costs. These results confirm the importance of consumer protection authorities paying attention to certain types of consumer credit and distribution channels.
