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Credit card holders, convenience users and revolvers: A tobit model with binary selection and ordinal treatment

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  • Andrew K.G. Tan

    (Universiti Sains Malaysia)

  • Steven T. Yen

    (The University of Tennessee)

  • Yiing Jia Loke

    (Universiti Sains Malaysia)

Abstract

This paper studies the characteristics of credit card holders in Malaysia and distinguishes between convenience users and revolvers. A Tobit model with binary selection and ordinal treatment is developed to accommodate the data feature that debts are incurred only among card holders and the endogeneity of card holding in card debt. Results from a stratified sample in Malaysia indicate that age, household size, income, education, loan commitments, and current-account ownership play a role in card holding. Age, loan commitments, previous card holdings, current-account ownership, and bad debt history affect the probability and level of card debt. Multi-card holders are more likely to be credit revolvers than convenience users.

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Bibliographic Info

Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): XIV (2011)
Issue (Month): (November)
Pages: 225-255

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Handle: RePEc:cem:jaecon:v:14:y:2011:n:2:p:225-255

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Keywords: credit card; revolving credit; sample selection; treatment effect;

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