Title: Consumer Search And Switching Behavior: Evidence From The Credit Card Industry
Abstract: CONSUMER SEARCH AND SWITCHING BEHAVIOR: EVIDENCE FROM THE CREDIT CARD MARKET by OMAR ABDELRAHMAN May 2011 Advisor: Dr. Ralph M. Braid Major: Economics Degree: Doctor of Philosophy The introduction of the credit card in the mid-twentieth century revolutionized and transformed how people live. Based on a set of new survey data, this dissertation empirically investigates and analyzes consumers’ behavior in the credit card market. Specifically, it investigates the underlying determinants of consumers’ 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, since balance-carrying consumers are sensitive to the terms of credit card contracts, such as the interest rate on existing
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: article
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