Effectiveness of Regulation of Educational Requirements for Non-Bank Credit Providers in Czech Republic

Abstract

Educational challenges for companies are created by market regulation less frequently versus market dynamics. Yet when law-enforced educational challenges appear, they have a significant impact on companies and their employees. This empirical study focuses on a new professional qualification regulation on the market of consumer credit in the Czech Republic. We analyze how companies cope with the new law-enforced educational requirements and whether the regulation has been successful. We analyzed more than 1900 certification tests. The sample accounted for approximately 10% of all employees tested in the Czech Republic in the first year of the regulation. All test variants were found unique, the expected point score of each variant had skewed distributions with only a small number of difficult variants. A significant majority of the tests showed expected values in an interval of 60-75% with only several outliers; test difficulty was balanced. The professional qualification tests separated employees with the required knowledge from those without and excluded accidental success. We identified a successful education management system that resulted in success rates above the country average: decentralized regional managers supervision, employee financial participation, and effective e-learning. We found structural changes in the market supply structure. Companies with professionally skilled employees met the regulatory conditions. The regulation combining centrally-provided requirements and questions with the market-based method of preparing for the professional qualification test was successful.