An Investigation of Credit Card Debt PDF Download
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Author: Tufan Ekici
Publisher:
ISBN:
Category : Consumer confidence
Languages : en
Pages : 111
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Book Description
Abstract: It has been argued that there are irrational elements in the credit card market since consumers borrow on cards at very high interest rates. Previous empirical investigations have used the nominal interest rate as a determinant of borrowing. In this part of my dissertation I analyze whether the expected real interest rate has an effect on borrowing behavior. I use a new set of monthly survey data (Ohio Economic Survey or OES) that has information on both price and income expectations and credit card use. Censored regression estimation results show that when price expectations are taken into account, consumers adjust their credit card borrowing to the expected real interest rate. Credit card borrowing is also found to be significantly related to two key income components of consumer confidence. Thus the behavior of credit card users is shown to be more complex than what has been argued in previous research, and based on these findings could not be characterized as irrational. The second part of my work investigates the effect of credit card debt on households' consumption. The existing literature offers evidence for the effect of some aggregate debt measures on aggregate consumption growth. I first show that a new index specifically designed to capture credit card indebtedness is able to explain up to 14 percent of aggregate durable consumption growth. The index again utilizes the OES data and incorporates some variables that have generally been unavailable to researchers. I then combine two micro data sets, the Consumer Expenditure Survey and the OES, to test for the extent to which individual households' spending decisions can be accounted for by credit card debt. I use two-sample-two-stage least squares (2S2SLS) method to estimate reduced form Euler equations and include lagged household debt as an explanatory variable. The results show that credit card debt negatively affects consumption growth. A one percent increase in credit card debt leads to a $1,000 decrease in household's total spending. Even though in aggregate data we see that spending increases as debt increases, looking at the individual household level data tells a different story. These results indicate the need to evaluate the long-run effects of credit card debt more carefully.
Author: Tufan Ekici
Publisher:
ISBN:
Category : Consumer confidence
Languages : en
Pages : 111
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Book Description
Abstract: It has been argued that there are irrational elements in the credit card market since consumers borrow on cards at very high interest rates. Previous empirical investigations have used the nominal interest rate as a determinant of borrowing. In this part of my dissertation I analyze whether the expected real interest rate has an effect on borrowing behavior. I use a new set of monthly survey data (Ohio Economic Survey or OES) that has information on both price and income expectations and credit card use. Censored regression estimation results show that when price expectations are taken into account, consumers adjust their credit card borrowing to the expected real interest rate. Credit card borrowing is also found to be significantly related to two key income components of consumer confidence. Thus the behavior of credit card users is shown to be more complex than what has been argued in previous research, and based on these findings could not be characterized as irrational. The second part of my work investigates the effect of credit card debt on households' consumption. The existing literature offers evidence for the effect of some aggregate debt measures on aggregate consumption growth. I first show that a new index specifically designed to capture credit card indebtedness is able to explain up to 14 percent of aggregate durable consumption growth. The index again utilizes the OES data and incorporates some variables that have generally been unavailable to researchers. I then combine two micro data sets, the Consumer Expenditure Survey and the OES, to test for the extent to which individual households' spending decisions can be accounted for by credit card debt. I use two-sample-two-stage least squares (2S2SLS) method to estimate reduced form Euler equations and include lagged household debt as an explanatory variable. The results show that credit card debt negatively affects consumption growth. A one percent increase in credit card debt leads to a $1,000 decrease in household's total spending. Even though in aggregate data we see that spending increases as debt increases, looking at the individual household level data tells a different story. These results indicate the need to evaluate the long-run effects of credit card debt more carefully.
Author: Saihong Jiang
Publisher:
ISBN: 9781109979374
Category :
Languages : en
Pages : 112
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Book Description
The widespread use of credit cards has challenged the traditional lifecycle hypothesis and introduced new uncertainties into U.S. financial markets. Based on a set of new survey data, this dissertation empirically investigates two critical issues in the credit card market: (1) the lifecycle borrowing and payoff profiles of credit card revolvers adjusting for cohort effects, (2) the underlying determinants of the consumer's choices regarding holding, borrowing, and payment on credit cards.
Author: Robert D. Manning
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 424
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Book Description
Credit Card Nation is the first comprehensive look at an ongoing social and economic crisis-America's escalting dependence on credit. By locating consumer debt within the context of corporate and governmental debt.
Author: Karen Rowlingson
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 102
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Book Description
Author: Jian Fang Gu
Publisher:
ISBN:
Category :
Languages : en
Pages : 156
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Book Description
Author: United States. General Accounting Office
Publisher:
ISBN:
Category : College students
Languages : en
Pages : 80
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Book Description
Author: Howexpert
Publisher: Howexpert
ISBN: 9781647580858
Category : Business & Economics
Languages : en
Pages : 64
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Book Description
If you want to get out of credit card debt fast, then get this book Credit card debt is a form of unsecured debt taken from a financial tool usually credit cards. These credit card debts are generated when credit card holder purchases products from these cards and accumulates due to the interest charged on it. Difficulty arises because people are not able to repay their loans effectively or in time. When a card holder is unable to pay his debts he is declared as "defaulter". In this book, "Living with Credit Card Debts", we are looking at how we can overcome the obstacle we often face when it comes to managing our credit cards. The basic ideas discussed in the book are as follows: - Plan your financial life. Financial problems are something most of us will have to manage eventually in life. In order to cope with the pressure that may arise, we need to have a proper financial plan and even financial goals. - Credit card ratings and debts. We need to know what we should do and not be overburdened by debts. - Study of financial management. We should make money work for us and not the other way round. We should have control of our money and not money have controls over us. - Avoid bad debt. This may be as a result of poor privatization that may make us go for what we do not necessarily need. HowExpert publishes quick 'how to' guides on all topics from A to Z by everyday experts.
Author: Richard Berthoud
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 256
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Book Description
Author: HowExpert HowExpert Press
Publisher: Createspace Independent Publishing Platform
ISBN: 9781539122043
Category :
Languages : en
Pages : 60
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Book Description
If you want to get out of credit card debt fast, then get this book! Credit card debt is a form of unsecured debt taken from a financial tool usually credit cards. These credit card debts are generated when credit card holder purchases products from these cards and accumulates due to the interest charged on it. Difficulty arises because people are not able to repay their loans effectively or in time. When a card holder is unable to pay his debts he is declared as "defaulter". In this book, "Living with Credit Card Debts", we are looking at how we can overcome the obstacle we often face when it comes to managing our credit cards. The basic ideas discussed in the book are as follows: * Plan your financial life. Financial problems are something most of us will have to manage eventually in life. In order to cope with the pressure that may arise, we need to have a proper financial plan and even financial goals. * Credit card ratings and debts. We need to know what we should do and not be overburdened by debts. * Study of financial management. We should make money work for us and not the other way round. We should have control of our money and not money have controls over us. * Avoid bad debt. This may be as a result of poor privatization that may make us go for what we do not necessarily need. Click BUY NOW and Be Debt Free!
Author: Li Xiaojing
Publisher:
ISBN:
Category : Balance of payments
Languages : en
Pages : 106
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Book Description
Abstract: Research on the behavior of credit card balance switching is underdeveloped because data on the phenomenon are quite limited. The few previous studies suggest that consumers' choice of accepting a low introductory interest rate and then switching a balance to it mainly depends on the APR difference and the outstanding credit card balances. This dissertation uses the Consumer Finance Monthly data with much richer information about consumers' credit history and card holding conditions to investigate several fundamental factors in balance switching. A theoretical model is developed to rationalize revolvers' decision about balance switching. An exercise of dynamic optimization is conducted to reveal the relationship between switchers' reservation rate, payment process, and the predicted duration spell. Econometric methods are used to do the empirical analysis. Two endogenous switching regression models are applied to inspect two distinct responses on the switchers' side. The accelerated lifetime model is adopted to capture the impact of the credit card debt and other relevant factors on the duration spell for holding an initial card. Last, we address the issue of unobserved heterogeneity in a structural Weibull-Gamma duration model. The two theoretical predictions in this paper are consistent with the primary findings in our empirical study. Switchers wait for an interest rate that is regarded as sufficiently low. Consumers with worse payment history have to wait longer to receive such a low rate. Our survival analysis shows that the degree of stress over the debt rather than the amount of credit card debt itself hastens consumers' switching decision. The fitted hazard rate is bell-shaped both in the accelerated lifetime model with Gamma distribution and in the structural duration model. Cardholders are most likely to switch in the window of the sixth to twelfth month staying with old cards. Our empirical findings support "adverse selection" as in Ausubel (1991). Switchers improved their debt situation right after switching. But balance switching could only bring symptomatic relief but not a credit cure. Switchers still bear a heavier burden of credit card debt in the long run.
