scholarly journals Are Information Disclosures Effective? Evidence from the Credit Card Market

2017 ◽  
Vol 9 (1) ◽  
pp. 277-307 ◽  
Author(s):  
Enrique Seira ◽  
Alan Elizondo ◽  
Eduardo Laguna-Müggenburg
Keyword(s):  
Financial Markets ◽  
Information Disclosure ◽  
Credit Card ◽  
Large Population ◽  
Warning Messages ◽  
Credit Card Market ◽  
Credit Scores ◽  
Randomized Control ◽  
The Impact ◽  
Actual Policy

Consumer protection in financial markets in the form of information disclosure is high on government agendas, even though there is little evidence of its effectiveness. We implement a randomized control trial in the credit card market for a large population of indebted cardholders and measure the impact of Truth-in-Lending-Act-type disclosures, de-biasing warning messages and social comparison information on default, indebtedness, account closings, and credit scores. We conduct extensive external validity exercises in several banks, with different disclosures, and with actual policy mandates. We find that providing salient interest rate disclosures had no effects, while comparisons and de-biasing messages had only modest effects at best. (JEL D14, D83, G21, G28, O16)

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 The Role of Data Analytics in Kisan Credit Card for Sustainable Development

2021 ◽  
Vol 9 (VI) ◽  
pp. 1157-1165
Author(s):  
Vrutti Tanna
Keyword(s):  
Sustainable Development ◽  
Rural Areas ◽  
Credit Card ◽  
Data Analytics ◽  
Crop Yields ◽  
Green Revolution ◽  
Large Population ◽  
Living Standard ◽  
The Impact ◽  
Agriculture Development

Agriculture is the main occupation in India as the large population is living in rural areas and having agriculture as their livelihood. According to the United Nations Development Programme, sustainable development in agriculture means national food security, upgrading the living standard of farmers, and conservation of the natural resources. The green revolution has called for high credit requirement for the purchase of high yielding seeds, irrigation systems, fertilizers, and chemical pesticides. Along with crop yields, the cost of production has raised drastically calling huge credit requirement. This huge credit requirement was not met by the cooperatives or commercial banks for their own limitations.The introduction of Kisan Credit Card (KCC) during the budget of 1998 has played a significant role in delivering the variable credit requirements in a flexible, easy, and timely credit The plan was launched by NABARD and Reserve Bank of India. The scheme aims to reduce farmer's dependency on informal banks for credit which is often lucrative yet very expensive. The card is offered by cooperative banks, regional rural banks, and public sector banks. Although KCC was a noble idea to help needy farmers, it has become a tool that is being misused by many, including people who are financially well off, and in this paper, we will discuss the misuse of Kisan credit card. The aim of this paper is to study the impact of Kisan credit card on agriculture development and how Kisan credit card has achieved sustainable development and what are the roadblocks still prevailing in achieving sustainable development and how the use of data analytics and artificial intelligence can help banks to provide Kisan credit card to farmers after analyzing their behavior and make sure that credit is being utilized only for agriculture development that can lead to sustainable development.

The Impact of EMU on European Financial Markets

2001 ◽  
Vol 62 (2) ◽  
pp. 83-95
Author(s):  
Ernst-Ludwig von Thadden
Keyword(s):  
Financial Markets ◽  
The Impact
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