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

Author

Listed:
  • 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.

Suggested Citation

  • Andrew K.G. Tan & Steven T. Yen & Yiing Jia Loke, 2011. "Credit card holders, convenience users and revolvers: A tobit model with binary selection and ordinal treatment," Journal of Applied Economics, Universidad del CEMA, vol. 14, pages 225-255, November.
  • Handle: RePEc:cem:jaecon:v:14:y:2011:n:2:p:225-255
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alessandra Amendola & Alfonso Pellecchia & Luca Sensini, 2016. "Factors Driving the Credit Card Ownership in Italy," International Business Research, Canadian Center of Science and Education, vol. 9(6), pages 131-142, June.
    2. Basnet, Hem C. & Donou-Adonsou, Ficawoyi, 2016. "Internet, consumer spending, and credit card balance: Evidence from US consumers," Review of Financial Economics, Elsevier, vol. 30(C), pages 11-22.

    More about this item

    Keywords

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

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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