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Two Essays on Credit Markets (Paperback) Loot Price: R1,863
Discovery Miles 18 630
Two Essays on Credit Markets (Paperback): Dandan Huang

Two Essays on Credit Markets (Paperback)

Dandan Huang

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Loot Price R1,863 Discovery Miles 18 630 | Repayment Terms: R170 pm x 12*

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With the brisk growth of credit card usage and debt over the past decade, the credit card market attracted more academic attention than ever before. The dissertation studies two important issues in this market, having to do with personal bankruptcy and consumers' debt, estimating credit card demand by using the RD design method. The first chapter examined the relationship between personal bankruptcy law and consumer' debt. I approach this issue by developing a two-period consumption model and empirically analyzing the relationship between leniency of personal bankruptcy laws and consumer' debt. The theoretical model and empirical work show that there is non-monotonic relationship between the bankruptcy laws and consumer's total debt. As the law becomes more lenient, total consumer debt increases at the beginning and then decreases. I also find that there exists a discontinuous jump in consumers' total debt as bankruptcy exemptions increase. Furthermore, personal bankruptcy laws have different impacts on the debt of rich and poor consumers. The leniency of the personal bankruptcy law increases high-income consumers' debt while decreasing low-income consumers' debt. Finally, this study contributes to the literature by specifically focusing on the credit card debt, which is considered as the type of unsecured debt that is most affected by bankruptcy law. Consumers who live in states with unlimited bankruptcy exemptions have significantly lower total debt, but significantly higher credit card debt. This finding suggests that bankruptcy laws have different impacts on consumers' total debt and credit card debt. The second chapter estimates the demand for credit card by using a regression discontinuity approach. Using the credit card application data provided by a major credit card issuer, this study is the first to apply the method to estimate the demand for credit cards. The method exploits a unique feature of the credit card solicitation campaign design. The credit issuer gives consumers different interest rate offers based on the consumers' credit score. We find that demand for credit cards is near unit elasticity. The demand elasticity is estimated at -1.07. In addition, consumers with better credit rating are more responsive to interest rates than consumers with lower credit rating. The results also show that without controlling for the endogeneity of contracts, a regression model would give biased estimates.

General

Imprint: Proquest, Umi Dissertation Publishing
Country of origin: United States
Release date: September 2011
First published: September 2011
Authors: Dandan Huang
Dimensions: 254 x 203 x 6mm (L x W x T)
Format: Paperback - Trade
Pages: 94
ISBN-13: 978-1-243-57297-4
Categories: Books > Business & Economics > Economics > General
LSN: 1-243-57297-3
Barcode: 9781243572974

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