Price Ceilings as Focal Points for Tacit Collusion: Evidence from Credit Cards

2003 ◽  
Vol 93 (5) ◽  
pp. 1703-1729 ◽  
Author(s):  
Christopher R Knittel ◽  
Victor Stango
Keyword(s):  
Credit Card ◽  
Focal Point ◽  
Credit Cards ◽  
State Level ◽  
Tacit Collusion ◽  
Focal Points ◽  
National Integration ◽  
Credit Card Market ◽  
Using Data ◽  
Perverse Effect

We test whether a nonbinding price ceiling may serve as a focal point for tacit collusion, using data from the credit card market during the 1980’s. Our empirical model can distinguish instances when firms match a binding ceiling from instances when firms tacitly collude at a nonbinding ceiling. The results suggest that tacit collusion at nonbinding state-level ceilings was prevalent during the early 1980’s, but that national integration of the market reduced the sustainability of tacit collusion by the end of the decade. The results highlight a perverse effect of price regulation.

scholarly journals Credit Card Rates and Consumer Switch: New Evidence

2016 ◽  
Vol 8 (12) ◽  
pp. 95
Author(s):  
Omar A. Abdelrahman
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Credit Card ◽  
Percent Level ◽  
Empirical Finding ◽  
Credit Cards ◽  
Credit Card Market ◽  
The Ohio State University ◽  
Using Data ◽  
Level Of Significance

This paper investigates the underlying determinants of consumer’s choices regarding switching credit-card balances. To estimate the likelihood that consumers switch credit cards, two logit models are estimated. Using data from the Consumer Finance Monthly (CFM) of The Ohio State University, the author finds that at the conventional 5 percent level of significance, the following variables have significance: old interest rate, new interest rate, duration of the introductory rate, balances, number of credit cards, homeownership, and age. As expected, interest rates, balances, the duration of new introductory offer rates, and homeownership have the greatest influence on why or why not people switch credit cards. The findings are consistent with the view that consumers make rational decisions in the credit card market, challenging Ausubel’s (1991) argument of credit card consumer irrationality and Calem and Mester’s (1995) empirical finding that credit card rates are sticky because consumers are irresponsive to rate cuts.

scholarly journals Credit Card Usage Among College Students in China

2018 ◽  
Vol 29 (2) ◽  
pp. 304-315 ◽  
Author(s):  
Rui Yao ◽  
Xiangyi Meng
Keyword(s):  
College Students ◽  
Credit Card ◽  
Credit Cards ◽  
Common Method ◽  
Financial Knowledge ◽  
Chinese College Students ◽  
Credit History ◽  
Using Data ◽  
High Level ◽  
Credit Card Usage

Credit cards have become a common method of payment for college students in China. It is important that they form good credit card usage behaviors and build a good credit history early in their financial life. Using data collected from 10 universities in China, results of this study found that being financially dependent on their parents is negatively associated with Chinese college students’ ability to pay their credit card bills. The study also found that students with a high level of financial knowledge were less likely to take cash advances on their credit card. Implications for financial educators and parents as well as policymakers were provided.

scholarly journals Klasifikasi Penentuan Pengajuan Kartu Kredit Menggunakan K-Nearest Neighbor

2020 ◽  
Vol 22 (1) ◽  
pp. 73-82
Author(s):  
Yogiek Indra Kurniawan ◽  
Tiyssa Indah Barokah
Keyword(s):  
Credit Card ◽  
Nearest Neighbor ◽  
Credit Cards ◽  
K Nearest Neighbor ◽  
The Status ◽  
Using Data

A credit card is a device payment issued by the bank certain made of plastic and useful as a tool payment on credit carried out by the owner of the card or in accordance with the name of listed in a credit card is on when making purchases goods or services. The problems facing in giving a credit cards to customers bank that have signed up is difficult to determine the category of a credit cards in accordance with the customer bank. By doing this research is expected to facilitate the bank or the analysis to determine the category of a credit card to customers bank right. The research used is by applying methods K-Nearest Neighbor to classify prospective customers in the making a credit card in accordance with the category of  customers by using data customers at the Bank BNI Syariah Surabaya. A method K-Nearest Neighbor used to seek patterns on the data customers so established variable as factors supporters in the form of gender, the status of the house, the status, the number of dependants (children), a profession and revenue annually. The results of this research shows that an average of the value of precision of 92%, the value of recall of 83%, and the value of accuracy of 93%. Thus, this application is effective to help analyst credit cards in classifying customers to get credit cards that appropriate criteria.

Do education sector credit cards differ with other credit cards in Malaysia?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Mahmudul Alam ◽  
Yusnidah Binti Ibrahim ◽  
Jaka Sriyana
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Education Sector ◽  
Business Managers ◽  
Content Type ◽  
Staff Members ◽  
Secondary Sources ◽  
Different Types ◽  
Credit Card Market ◽  
Financial Regulatory

Purpose The credit card market is very large and segmented by targeting different types of consumers. One type of credit card is one that specifically targets people in the education sector, for instance, students, teachers and other staff members. This study aims to compare the features of education and other credit cards in Malaysia. Design/methodology/approach The study analyzes data concerning 234 credit cards by using descriptive statistics and a one-way analysis of variance test. Findings Out of 234 credit cards, this study found only two credit cards especially target education sector customers. The study evaluated 13 features of these credit cards and found that only 2 features are statistically significantly different from other conventional credit cards in Malaysia. These features are interest rate and cash withdrawal charge fees. Originality/value This is an original study based on the compilation of data from secondary sources. The findings will provide valuable insights to financial regulatory policymakers, academics and business managers.

scholarly journals Do Banks Pass through Credit Expansions to Consumers Who want to Borrow?*

2017 ◽  
Vol 133 (1) ◽  
pp. 129-190 ◽  
Author(s):  
Sumit Agarwal ◽  
Souphala Chomsisengphet ◽  
Neale Mahoney ◽  
Johannes Stroebel
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Credit Expansion ◽  
New Approach ◽  
Credit Score ◽  
Credit Card Market ◽  
Marginal Propensity ◽  
Pass Through ◽  
The Impact ◽  
Household Borrowing

Abstract We propose a new approach to studying the pass-through of credit expansion policies that focuses on frictions, such as asymmetric information, that arise in the interaction between banks and borrowers. We decompose the effect of changes in banks’ cost of funds on aggregate borrowing into the product of banks’ marginal propensity to lend (MPL) to borrowers and those borrowers’ marginal propensity to borrow (MPB), aggregated over all borrowers in the economy. We apply our framework by estimating heterogeneous MPBs and MPLs in the U.S. credit card market. Using panel data on 8.5 million credit cards and 743 credit limit regression discontinuities, we find that the MPB is declining in credit score, falling from 59% for consumers with FICO scores below 660 to essentially zero for consumers with FICO scores above 740. We use a simple model of optimal credit limits to show that a bank’s MPL depends on a small number of parameters that can be estimated using our credit limit discontinuities. For the lowest FICO score consumers, higher credit limits sharply reduce profits from lending, limiting banks’ optimal MPL to these consumers. The negative correlation between MPB and MPL reduces the impact of changes in banks’ cost of funds on aggregate household borrowing, and highlights the importance of frictions in bank-borrower interactions for understanding the pass-through of credit expansions.

scholarly journals An Empirical Investigation on Credit Card Repayment Pattern of Academicians in Malaysia

2018 ◽  
Author(s):  
Kuah Yoke Chin ◽  
Wei Chooi Yi ◽  
Chin Lai Kwan ◽  
Chia Mei Si
Keyword(s):  
Credit Card ◽  
Empirical Investigation ◽  
Credit Cards ◽  
Tertiary Institution ◽  
Moderating Variables ◽  
Personal Attitude ◽  
Credit Card Market ◽  
The Government ◽  
Informed Society ◽  
Moderating Role

The credit card market has witnessed tremendous growth resulting from a paradigm shift in technology. The genuine usage of credit cards as a form of convenience has diverged to overspending, irresponsibility, revolving liability and bankruptcy. This implies that possession of credit cards has brought about a change in users’ repayment behavior. Thus, this study aims to determine academicians’ credit card repayment pattern in a private tertiary institution in Malaysia. The dependent variable is the repayment pattern and the independent variables that serve as the attributes include personal attitude and spending pattern, while, gender and parenthood serve as the moderating variables. Findings revealed that personal attitude and spending pattern were important attributes in determining the repayment pattern among the academicians. Gender and parenthood were found to play a moderating role in the repayment pattern. Findings from this study is expected to facilitate the government and credit card companies to work towards nurturing a financially healthier and informed society, and also to  each out positively to the younger generations through the influence of the academicians.  

CONSUMER PREFERENCES AND REGULATIONS IN CREDIT CARD MARKETS: EVIDENCE FROM TURKEY

2021 ◽  
pp. 1-27
Author(s):  
G. GULSUN AKIN ◽  
AHMET FARUK AYSAN ◽  
EZGI ÖZER ◽  
LEVENT YILDIRAN
Keyword(s):  
Market Power ◽  
Credit Card ◽  
Choice Model ◽  
Consumer Preferences ◽  
Credit Cards ◽  
Differentiated Products ◽  
Private Banks ◽  
Credit Card Market ◽  
Credit Card Pricing ◽  
Public Banks

In this paper, we analyze the demand side of the credit card market. Using unique survey data and a discrete choice model, we uncover consumer preferences for all price and nonprice features of credit cards. Our results provide evidence for an alternative explanation for the credit card pricing puzzles. We show that consumers view credit cards as highly differentiated products with both bank-level and card-level nonprice features. When selecting their credit cards, they predominantly prioritize these nonprice features over prices. Although private banks charge higher prices for their credit card services than other banks, the majority of consumers choose them as issuers due to their bank-level and card-level nonprice features. Consumers who prioritize prices tend to choose the credit cards of participation or public banks. Widespread branch/automated teller machine networks as bank-level features and installments, bonuses/rewards/miles and the prestige of the card as card-level features are particularly effective in consumers’ decisions to choose private banks as issuers. Such strong preferences for nonprice features seem to furnish private banks with market power. Hence, we argue that underlying issuers’ market power is also this differentiated nature of credit cards, for which regulatory measures are not self-evident.

scholarly journals Consumer Credit Risk Analysis using Data Mining Clustering and Business Intelligence Solutions

2020 ◽  
Vol 9 (5) ◽  
pp. 1349-1358
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Fraud Detection ◽  
Machine Learning Algorithms ◽  
Electronic Transactions ◽  
Good Classification ◽  
Credit Risk Analysis ◽  
Using Data ◽  
Consumer Credit Risk

In the recent years, the scale of online transaction has increased considerably. Subsequently, this has also increased the number of fraud cases, causing billions of dollars losses each year worldwide. Therefore, it has become mandatory to implement mechanisms that are able to assist in fraud detection. In this work, the use of Ensemble Genetic Algorithm is proposed to identify frauds in electronic transactions, more specifically in online credit card operations. A case study, using the dataset containing transactions made by credit cards in September 2013 by European cardholders, is used. This dataset presents transactions that occurred in two days, where we have 492 frauds out of 284,807 transactions. The presented algorithm achieves good performance in fraud detection as compared to the other machine learning algorithms. The results show that the proposed algorithm achieved good classification effectiveness in all tested instances.

scholarly journals Developing credit card market from Vietnamese consumers’ perspective

2020 ◽  
Vol 7 (1) ◽  
Author(s):  
Vuong Duc Hoang Quan ◽  
Trinh Hoang Nam
Keyword(s):  
Credit Card ◽  
Positive Impact ◽  
Behavioral Control ◽  
Empirical Studies ◽  
Credit Cards ◽  
Subjective Norm ◽  
Perceived Usefulness ◽  
Perceived Behavioral Control ◽  
Factors Affecting ◽  
Credit Card Market

This study aims to identify the factors affecting the intention to use credit cards in Vietnam. Previous empirical studies on planned and actual behaviors showed that customers decide to own and use credit cards through their awareness of credit cards, including perceived usefulness, perceived behavioral control and subjective norm. To collect the data, we use structured self-administered questionnaires from 426 respondents making payments through bank accounts. The findings show that perceived usefulness, perceived behavioral control and subjective norm have a positive impact on credit card adoption among Vietnamese consumers. This study also supposes that customers from different demographics have different intentions to use credit cards. Some recommendations are made to improve the effects of banks’ policies on credit card application and use.

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