![]() " Unrealistic optimism in consumer credit card adoption," Yang, Sha & Markoczy, Livia & Qi, Min, 2007.Journal of Industrial Economics, Wiley Blackwell, vol. " Pricing with Consumer Switching Costs: Evidence from the Credit Card Market," " Do Switching Costs Make Markets Less Competitive?," " Solving the mystery of high credit card rates,"įRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov29. " Consumer Behavior and the Stickiness of Credit Card Interest Rates,"Ĭenter for Financial Institutions Working Papersĩ4-14, Wharton School Center for Financial Institutions, University of Pennsylvania. " Consumer behavior and the stickiness of credit card interest rates,"ĩ5-10, Federal Reserve Bank of Philadelphia. ![]() White Center for Financial Research.Ġ3-94, Wharton School Rodney L. White Center for Financial Research Working Papersģ-94, Wharton School Rodney L. " Consumer Behavior and the Stickiness of CreditCard Interest Rates," 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. 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. 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. To estimate the likelihood that consumers switch credit cards, two logit models are estimated. This paper investigates the underlying determinants of consumer¡¯s choices regarding switching credit-card balances.
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