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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
  • Steven T. Yen
  • Yiing Jia Loke

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, Taylor & Francis Journals, vol. 14(2), pages 225-255, November.
    • Handle: RePEc:taf:recsxx:v:14:y:2011:i:2:p:225-255
    DOI: 10.1016/S1514-0326(11)60013-5
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    Citations

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    Cited by:

    1. Stephen Brown & Chris Veld & Yulia Veld‐Merkoulova, 2020. "Credit Cards: Transactional Convenience or Debt‐Trap?," International Review of Finance, International Review of Finance Ltd., vol. 20(2), pages 295-322, 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.
    3. Scott L. Fulford & Scott Schuh, 2020. "Revolving versus Convenience Use of Credit Cards: Evidence from U.S. Credit Bureau Data," Working Papers 20-12, Department of Economics, West Virginia University.
    4. Agnieszka Strzelecka & Danuta Zawadzka, 2020. "Why Households Borrow Money? Socio-Economic Factors Affecting Households Debts: A Model Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 820-839.
    5. 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.
    6. Hem C. Basnet & Ficawoyi Donou‐Adonsou, 2016. "Internet, consumer spending, and credit card balance: Evidence from US consumers," Review of Financial Economics, John Wiley & Sons, vol. 30(1), pages 11-22, September.
    7. Ravindra HEWA KURUPPUGE, & Sisira Kumara NARADDA GAMAGE, & Alexandru Mircea Nedelea, 2017. "Credit Cards As A Determinant Of Social Capital: A Study Of Rational Behaviour Of Urbanised Consumers," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(1), pages 1-34, January.
    8. Scott L. Fulford & Scott Schuh, 2023. "Revolving versus Convenience Use of Credit Cards: Evidence from U.S. Credit Bureau Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(7), pages 1667-1701, October.

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