Research
Prof. Ruth Plato-Shinar
Consumer protection for bank customers – is it needed in the era of digital banks?
In light of the great power and information gaps characterizing relations between banks and their average customer, two different approaches to protecting bank customers can be identified. One approach emphasizes the bank's duty to protect its customer's interests. A notable manifestation of this approach is the banks' fiduciary duty, requiring the bank to prefer the customer's interest over any other, sometimes even its own. The second approach utilizes the new financial technologies to empower customers, by providing them with a range of tools for managing their finances and making informed decisions independently. On the face of it, the two approaches appear to be contradictory: the first seeks to place responsibility for the customer on the bank, while the second places the responsibility on the customers themselves. The purpose of this study is to analyze the implications of the two approaches for the customer's status and to formulate recommendations for desirable regularization to protect bank customers.
The study was sponsored by the Safra Institute and conducted by Prof. Ruth Plato-Shinar, Director of the Center for Banking Law and Financial Regulation at the Netanya Academic College.
January 2024
Prof. Evgeny Leandres, Tel Aviv University
Does Market Efficiency Imply Capital Allocation Efficiency? The Case of Decentralized Exchanges
January 2024
Prof. Shlomith Zuta
Should an excess profit tax be imposed on Israeli banks? An historic and global review
In May 2023 a bill for 'taxing the excess profits of banking corporations, 2023' was laid on the Knesset's table. According to this bill, the banks' excess profits would be taxed due their growing credit gaps. The purpose of this study is to examine the success of excess profit tax by analyzing its history and the current situation in countries that already impose it, and to formulate recommendations on the advisability of levying an excess profit tax on Israeli banks.
December 2023
Prof. Gal Oesteicher-Singer, Dr. Inbal Yahav Shenberger and Shir Edgar, the Coller School of Management
Does using GPT increase the gender gap in financial decisions?
(Work in progress, to be published soon)
Michael Leshem – PhD candidate, Coller School of Management, T.A. University
Deposit decisions, liquidity management and bank runs
(Work in progress, to be published soon)
Dr. Nimrod Segev and Dr. Sivan Frenkel
The effects of the reform on free transfer among banks
In September 2021 an amendment to Israel's Banking Law (Customer Service) 1981 went into effect, obligating the banking system to enable bank customers to transfer from one bank to another easily, quickly, safely and at no cost (henceforth – 'the transfer from bank to bank reform'). The purpose of the reform, led by the Bank of Israel and the Ministry of Finance, was to increase competition among Israeli banks; to enable new players to offer financial services; to facilitate transfer among banks; and to enhance customers' bargaining power, thereby enabling them to improve their terms at their (either existing or new) banks.
During the first year, 96,000 requests to change banks were received, and 67,000 customers actually moved to another bank by means of the online system. In other words, less than 1% of Israeli bank customers made use of the system. It should be noted, however, that a reform boosting the competitive threat is likely to improve consumer welfare - even if the number of actual transfers, or requests for transfer, does not increase significantly. Thus, for instance, the reform can enhance the customers' bargaining power vis-à-vis the banks, while concern about losing customers can encourage banks to improve the terms for managing the accounts of existing customers, including the cost of various bank products. The purpose of this study, conducted jointly by the Safra Institute and the Financial Department of the Bank of Israel’s Research Division, is to examine the effect of the reform on competition and consumer welfare in the retail credit market. The study uses the Bank of Israel's credit database and is led by Dr. Nimrod Segev from the Bank of Israel and Dr. Sivan Frenkel of the Coller School of Management.
(Work in progress, to be published soon)
