Title: Risk in the Credit Card Industry When Consumer Types are Not Observable
Abstract: We study strategies of credit card companies. Due to lack of the ability to observe consumer types credit card companies under competition resort to aggressive strategies, oversupplying the credit card market. A sample and a population shift cause increase in credit risk, but credit card companies find no incentive to turn to defensive strategies. Oversupply of credit during good years results in a build-up of potential delinquencies, and a large credit loss becomes inevitable when the economy takes a downturn.
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 3
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