scholarly journals Regulating Consumer Financial Products: Evidence from Credit Cards *

2014 ◽  
Vol 130 (1) ◽  
pp. 111-164 ◽  
Author(s):  
Sumit Agarwal ◽  
Souphala Chomsisengphet ◽  
Neale Mahoney ◽  
Johannes Stroebel
Keyword(s):  
Credit Card ◽  
Financial Regulation ◽  
Consumer Credit ◽  
Credit Cards ◽  
Set Covering ◽  
Difference In Differences ◽  
Data Set ◽  
Financial Products ◽  
Regulatory Limits ◽  
Over Time

Abstract We analyze the effectiveness of consumer financial regulation by considering the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act. We use a panel data set covering 160 million credit card accounts and a difference-in-differences research design that compares changes in outcomes over time for consumer credit cards, which were subject to the regulations, to changes for small business credit cards, which the law did not cover. We estimate that regulatory limits on credit card fees reduced overall borrowing costs by an annualized 1.6% of average daily balances, with a decline of more than 5.3% for consumers with FICO scores below 660. We find no evidence of an offsetting increase in interest charges or a reduction in the volume of credit. Taken together, we estimate that the CARD Act saved consumers $11.9 billion a year. We also analyze a nudge that disclosed the interest savings from paying off balances in 36 months rather than making minimum payments. We detect a small increase in the share of accounts making the 36-month payment value but no evidence of a change in overall payments.

scholarly journals The COVID-19 Shock and Consumer Credit: Evidence from Credit Card Data

2021 ◽  
Vol 2021 (008) ◽  
pp. 1-55
Author(s):  
Akos Horvath ◽  
◽  
Benjamin Kay ◽  
Carlo Wix ◽  
◽  
...  
Keyword(s):  
Interest Rates ◽  
Credit Card ◽  
Negative Impact ◽  
Consumer Credit ◽  
Credit Cards ◽  
Sharp Decrease ◽  
Main Driver ◽  
Credit Card Data ◽  
Pandemic Severity ◽  
The Impact

We use credit card data from the Federal Reserve Board's FR Y-14M reports to study the impact of the COVID-19 shock on the use and availability of consumer credit across borrower types from March through August 2020. We document an initial sharp decrease in credit card transactions and outstanding balances in March and April. While spending starts to recover by May, especially for risky borrowers, balances remain depressed overall. We find a strong negative impact of local pandemic severity on credit use, which becomes smaller over time, consistent with pandemic fatigue. Restrictive public health interventions also negatively affect credit use, but the pandemic itself is the main driver. We further document a large reduction in credit card originations, especially to risky borrowers. Consistent with a tightening of credit supply and a flight-to-safety response of banks, we find an increase in interest rates of newly issued credit cards to less creditworthy borrowers.

The predictive value of strategic orientation for ESG performance over time

2020 ◽  
Vol 20 (1) ◽  
pp. 123-142 ◽  
Author(s):  
Nicolas Chevrollier ◽  
Jianhong Zhang ◽  
Thijs van Leeuwen ◽  
André Nijhof
Keyword(s):  
Business Strategy ◽  
Fixed Effect Model ◽  
Strategic Orientation ◽  
Set Covering ◽  
Data Set ◽  
Content Type ◽  
Publicly Traded Companies ◽  
Strategic Orientations ◽  
The Relationship ◽  
Over Time

Purpose Despite the scholarly attention for the integration of sustainability within business strategy and processes, little is known about how strategic orientations of companies influence this integration. Drawing on stewardship theory, this paper aims to analyse the influence of strategic orientation of companies on their environmental, social and corporate governance (ESG) performance and the moderating effect of three different political models of economy (Rhine, British and American). Design/methodology/approach This paper creates a measurement for strategic orientations by using a coding scheme with a five-category evaluation matrix. The main empirical analysis is done by a fixed-effect model with a panel data set covering 179 publicly traded companies over the 2009-2016 period. Findings The conclusions of this paper present that – consistent over time – a stronger orientation on stewardship positively associates with higher ESG performance. Additionally, the political model of economy significantly alters the relationship indicating the effect of strategic orientation on ESG performance. The relationship is significantly stronger in the Rhine model and significantly weaker in the British model, when both compared to the American model. Originality/value The implications of this paper are vital to understanding corporate strategic orientation and its relationship to actual corporate behaviour and long-term performance. Implementing the elements of focus, motivation, commitment, support and communication linked to a stewardship orientation is fundamental to achieve higher levels of sustainability performance.

The “Everything Card” and Consumer Credit in the United States in the 1960s

2011 ◽  
Vol 85 (3) ◽  
pp. 551-575 ◽  
Author(s):  
Christine Zumello
Keyword(s):  
New York ◽  
Commercial Bank ◽  
Credit Card ◽  
Consumer Credit ◽  
Credit Cards ◽  
The United States ◽  
Retail Banking ◽  
Mass Consumption ◽  
Legislative Action ◽  
The 1960S

First National City Bank (FNCB) of New York launched the Everything Card in the summer of 1967. A latecomer in the field of credit cards, FNCB nonetheless correctly recognized a promising business model for retail banking. FNCB attempted not only to ride the wave of mass consumption but also to capitalize on the profit-generating potential of buying on credit. Although the venture soon failed, brought down by the losses that plagued the bank due to fraud, consumer discontent, and legislative action, this final attempt by a major single commercial bank to launch its own plan did not signify the end of credit cards. On the contrary, the Everything Card was a harbinger of the era of the universal credit card.

Potential Jurisprudential Adaptation for the Tripartite Credit Card Transaction from an Islamic Perspective

2014 ◽  
Vol 28 (4) ◽  
pp. 317-365
Author(s):  
Mohammed Jassem Mohammed ◽  
Rahmah Ismail ◽  
Ruzian Markom
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Great Effort ◽  
Financial Instruments ◽  
Financial Contracts ◽  
The West ◽  
Islamic Perspective ◽  
Financial Contract ◽  
Over Time

The credit card represents one of the most important financial instruments at present. The credit card concept originated and was developed in the West under the rules of conventional law. Over time the credit card has invaded the Islamic markets. A credit card transaction does not fall under any of the known financial contract categories in Islamic principles. Therefore, determining the Islamic rulings and finding a jurisprudential adaptation for such credit card transactions is essential for clarifying relevant jurisprudential rulings, as one cannot specify whether a specific transaction is permitted or prohibited without a jurisprudential adaptation on the matter. Islamic researchers have taken great effort to clarify the jurisprudential adaptation of a credit card transaction. This article will examine the potential legitimate nature of the credit card transaction in order to determine Islamic rulings. The concept ‘credit card’ originated in the West and developed under the rules of conventional law. Although credit cards have since invaded the Islamic markets, their transactions do not fall under any of the known categories for Islamic financial contracts; therefore, one must determine the Islamic rulings that relate to such transactions. Islamic scholars have exerted much effort to find a jurisprudential adaptation for the credit card transaction, which is essential in order to clarify jurisprudential rulings on transactions and to specify whether a transaction is permitted or prohibited. This article examines the potential legitimate nature of the credit card transaction in order to determine the Islamic rulings.

The Transactions Demand for Credit Cards

2007 ◽  
Vol 7 (1) ◽  
Author(s):  
Kathleen W. Johnson
Keyword(s):  
Credit Card ◽  
Consumer Credit ◽  
Credit Cards ◽  
Credit Card Debt ◽  
Financial Vulnerability ◽  
Short Term ◽  
Payment Instruments ◽  
The Cost ◽  
The Relationship

Abstract I argue that the measure of credit card debt used by researchers has grown rapidly in part because it captures debt arising from transactions in which a credit card is used because of its advantages over other payment instruments. Increases in debt stemming from such use may not signal greater household financial vulnerability if households are willing and able to repay this short-term debt. However, it may suggest that the cost of using credit cards to pay for purchases has declined relative to other payment instruments. I conclude that had transactions demand remained at its real 1992 levels, rather than growing almost 15 percent per year, measured credit card debt would have grown a bit less than 1 percentage point slower per year between 1992 and 2001. Moreover, I show that removing transactions demand from aggregate consumer credit can alter conclusions about the relationship between credit and consumption.

scholarly journals Risky Business: Legal and Economic Perspectives on South Korea's Individual Debtor Rehabilitation Acts

2006 ◽  
Vol 7 (2) ◽  
pp. 61-76
Author(s):  
Jasper Kim
Keyword(s):  
Asset Management ◽  
Credit Card ◽  
Consumer Credit ◽  
Credit Cards ◽  
Response Mode ◽  
Credit Counseling ◽  
The Government ◽  
Economic Perspectives ◽  
The Individual ◽  
Risky Business

Two years following the 1997-98 Korean financial crisis, the Korean government attempted to bolster consumer spending and re-invigorate the national economy by pursuing a series of policies that directly promoted the use of consumer credit cards. Subsequently, consumer credit card spiked upward, which led to a dramatic surge in individual debtor defaults. The government in response mode again thereafter initiated a three-pronged legislative effort to counter the post-1997 individual debtor polemic: (i) the Individual Debtor Rehabilitation Act (“IDRA” or the “Act”); (ii)) the Korea Asset Management Company’s Bad Bank (KAMCO or “Bad Bank”); and (iii) the Credit Counseling and Recovery Service (CCRS) (collectively, the “Legal Acts”). This paper surveys and analyzes the Legal Acts approach to resolving South Korea’s post-1997 consumer credit card spending polemic.

scholarly journals The Partisan Consequences of Secularisation

2021 ◽  
Vol 3 (1) ◽  
pp. 118-140
Author(s):  
Christopher D. Raymond
Keyword(s):  
Electoral Politics ◽  
Social Identities ◽  
Set Covering ◽  
Voting Behaviour ◽  
Data Set ◽  
Data Limitations ◽  
Personal Morality ◽  
Time Changes ◽  
Over Time ◽  
Behaviour Data

Abstract While we would expect secularisation to have important consequences for voting behaviour, data limitations in previous studies leave the specific implications of secularisation for Canadian electoral politics unclear. Using a data set covering the period between 1975 and 2005, this study examines which aspects of secularisation have affected the partisan balance of the electorate by estimating the effects of religious belonging, behaving, and believing on party preferences. The results show that while the effects of religion (and other social identities) have not changed over time, changes in the composition of the electorate resulting from the growing share of non-religious Canadians holding liberal views on questions of personal morality has benefited the NDP and undercut support for the Conservatives.

Internalization of Advertising Services: Testing a Theory of the Firm

2021 ◽  
Vol 40 (5) ◽  
pp. 946-963
Author(s):  
Birger Wernerfelt ◽  
Alvin Silk ◽  
Shuyi Yu
Keyword(s):  
Time Series ◽  
Time Series Data ◽  
Theory Of The Firm ◽  
Set Covering ◽  
Series Data ◽  
Advertising Agencies ◽  
Cross Sectional ◽  
Data Set ◽  
Trade Associations ◽  
Over Time

In 1956, a group of trade associations representing publishers and independent advertising agencies signed a consent decree aimed at ending a set of trade practices that for half a century effectively precluded advertisers from owning and operating in-house agencies. Since then, large firms have internalized more and more of the services formerly performed by external agencies, perhaps as many as half. We use this phenomenon to test a theory of the firm, thereby simultaneously offering an explanation for it. The theory suggests that firms should internalize activities for which their competitive position implies (1) that it is more important for human capital to be firm specific as opposed to function specific and (2) that frequent modifications are desirable. It also predicts (3) that these two effects reinforce each other. This is the first paper to report on a test of the specialization hypothesis, and we find that it is robustly significant in a cross-sectional data set covering nine different agency activities in 79 firms. In addition to the cross-sectional test, we informally present some time-series data suggesting that both specialization and frequency have grown over time along with the level of internalization.

Consumers‟ Acceptance of „Halal‟ Credit Card Services: An Empirical Analysis

2015 ◽  
Vol 3 (1) ◽  
pp. 51 ◽  
Author(s):  
Zaimy Johana Johan ◽  
Lennora Putit
Keyword(s):  
Perceived Control ◽  
Credit Card ◽  
Credit Cards ◽  
Product Knowledge ◽  
Key Factors ◽  
Developing Nation ◽  
Business Transactions ◽  
Factors Influencing ◽  
Financial Credit ◽  
Survey Questionnaires

Many past researches have been carried out in an attempt to continuously understand individuals‟ consumption behaviour. This study was conducted to investigate key factors influencing consumers‟ potential acceptance of halal (or permissible) financial credit card services. Specifically, it anticipated the influence of attitude, social influences and perceived control on consumers‟ behavioural intention to accept such services. In addition, factors such as religiosity and product knowledge were also postulated to affect consumers‟ attitude towards the act of using halal credit cards for any retail or business transactions. Using non-probability sampling approach, a total of 500 survey questionnaires was distributed to targeted respondents in a developing nation but only 220 usable feedbacks were received for subsequent data analysis. Regression results revealed that religiosity and product knowledge significantly influence consumers‟ attitude toward using halal credit card services.  Attitude in turn, subsequently has a significant impact on consumers‟ intention to accept halal financial credit card services. Several theoretical and managerial contributions were observed in this study.   

scholarly journals Neural mechanisms of credit card spending

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Sachin Banker ◽  
Derek Dunfield ◽  
Alex Huang ◽  
Drazen Prelec
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Purchase Behavior ◽  
Facilitation Effect ◽  
Product Price ◽  
Personal Credit ◽  
Psychological Mechanisms ◽  
Network Activation ◽  
Payment Instruments ◽  
Reward Network

AbstractCredit cards have often been blamed for consumer overspending and for the growth in household debt. Indeed, laboratory studies of purchase behavior have shown that credit cards can facilitate spending in ways that are difficult to justify on purely financial grounds. However, the psychological mechanisms behind this spending facilitation effect remain conjectural. A leading hypothesis is that credit cards reduce the pain of payment and so ‘release the brakes’ that hold expenditures in check. Alternatively, credit cards could provide a ‘step on the gas,’ increasing motivation to spend. Here we present the first evidence of differences in brain activation in the presence of real credit and cash purchase opportunities. In an fMRI shopping task, participants purchased items tailored to their interests, either by using a personal credit card or their own cash. Credit card purchases were associated with strong activation in the striatum, which coincided with onset of the credit card cue and was not related to product price. In contrast, reward network activation weakly predicted cash purchases, and only among relatively cheaper items. The presence of reward network activation differences highlights the potential neural impact of novel payment instruments in stimulating spending—these fundamental reward mechanisms could be exploited by new payment methods as we transition to a purely cashless society.

Sign in / Sign up

Export Citation Format

Share Document