Consumer Finance
Spring term, Block E/G
M 1:40 PM - 3:40 PM
Professor Howell Jackson and Professor Peter Tufano (Harvard Business School)
3 credits LAW-33720A
(2 classroom + 1 written work)
2, 3, or 4 optional clinical credits LAW-33720C
This course is designed for students who seek to understand opportunities in consumer finance businesses, and who may want to work for or with consumer finance companies, invest in them, consult to them, advise them, or regulate them. More broadly, the consumer finance sector touches most other sectors of the economy, directly or indirectly, and involves each of us in our daily lives, so it provides a window into understanding consumer behavior, personal financial choices, the broader economy, and political economy.
The course has five conceptual underpinnings. First, it emphasizes the functional perspective, which is the notion that one should focus on functions, rather than institutions or products, to best understand the financial system. The functions delivered by the consumer finance system include payments, savings, credit, and others. Second, related to this functional perspective, we take a consumer-centric approach. How do psychological and sociological factors influence needs and preferences? Third, with this consumer centric approach, we focus on product and process innovations that can deliver these needs more efficiently. Fourth, we focus on the economics of consumer finance businesses, with a special emphasis on the costs of customer acquisition, product distribution, and product delivery. Finally, we focus on the legal context within which consumer finance businesses operate. What are the guiding principles behind government involvement in the consumer finance sector? How do laws and regulations create opportunities and challenges for firms in this space? How do public authorities prevent predatory and abusive practices without unduly hampering innovation and efficiency?
The course will be organized around 13 two-hour sessions on Mondays and Tuesdays on the HBS X schedule, from 1:30 to 3:30. The course is jointly listed at Harvard Business School and Harvard Law School and will be co-taught by professors at both schools. Class sessions will rotate between HBS and HLS. To accommodate differences in school calendars, the first meeting of the class will occur on Tuesday, January 27th, which is the week before the HLS Spring semester officially begins. For this first session, students enrolled in the course should come at 1:00 p.m. for a preliminary overview of course logistics. The last session of the course will take place on Tuesday, April 21st, which is a week before the last week of HLS classes. Most sessions will involve a combination of cases and readings, and all will involve active and vigorous case discussions. Course materials will involve a wide variety of financial institutions and products, including innovations in credit products, payment products, savings products, insurance products, and consumer information systems. While the materials will largely be drawn from the US financial services sector, a few sessions will detail case studies from other countries, such as India and South Africa. The course is multidisciplinary and will deal with issues from finance, operations, marketing, and the law, among others. Students will be required to write a paper and may work in small teams. Paper topics must be approved in advance and students may be asked to present their findings orally as well.
For HLS students, the course will count for a total of three credits: two classroom credits plus one writing credit. There are no prerequisites, though the course may be of particular interest to students who have previously taken Regulation of Financial Institutions or the Predatory Lending/Consumer Protection Clinical Workshop.
HLS students may participate in the optional spring clinical, with placements at the WilmerHale Legal Services Center's Predatory Lending/Consumer Protection clinic. Please refer to the HLS Office of Clinical and Pro Bono Programs (http://www.law.harvard.edu/academics/clinical) for clinical registration dates and early add/drop deadlines.