Access the full text.
Sign up today, get DeepDyve free for 14 days.
David Gross, Nicholas Souleles (1999)
An Empirical Analysis of Personal Bankruptcy and DelinquencyRisk Management & Analysis in Financial Institutions eJournal
Lawrence Ausubel (1999)
Adverse Selection in the Credit Card Market
Sumit Agarwal, S. Chakravorti, Anna Lunn (2010)
Why Do Banks Reward Their Customers to Use Their Credit Cards?Microeconomics: Decision-Making under Risk & Uncertainty eJournal
(2006)
Asymmetric Information in Dynamic Contract Settings: Evidence from the Home Equity Market
Kevin Amess, L. Drake, H. Knight (2010)
An Empirical Analysis of UK Credit Card PricingReview of Industrial Organization, 37
Dean Karlan, Jonathan Zinman (2005)
Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field ExperimentMicroeconomic Theory eJournal
Wendy Edelberg (2004)
Testing for Adverse Selection and Moral Hazard in Consumer Loan MarketsBoard of Governors: Finance & Economics Discussion Series (Topic)
D. Altman, D. Cutler, R. Zeckhauser (1998)
Adverse Selection and Adverse RetentionThe American Economic Review, 88
H. Bester (1985)
Screening vs. Rationing in Credit Markets with Imperfect InformationThe American Economic Review, 75
P. Chiappori, B. Salanié (2000)
Testing for Asymmetric Information in Insurance MarketsJournal of Political Economy, 108
Hence, our results should be interpreted as a minimal test of adverse selection in the credit card market. LITERATURE CITED
David Genesove (1993)
Adverse Selection in the Wholesale Used Car MarketJournal of Political Economy, 101
(2008)
Re - lationship Lending : Evidence from the Consumer Credit Market
(1970)
The Market for “Lemons”: Quality Uncertainty and the Market Mechanism
W. Adams, L. Einav, Jonathan Levin (2009)
Liquidity Constraints and Imperfect Information in Subprime LendingThe American Economic Review, 99
Gross Gross, Souleles Souleles (2002)
An Empirical Analysis of Personal Bankruptcy and DelinquencyReview of Financial Studies, 15
J. Stiglitz, A. Weiss (1981)
Credit Rationing in Markets with Imperfect InformationThe American Economic Review, 71
Analyzing unique data from multiple large‐scale randomized marketing trials of preapproved credit card solicitations by a large financial institution, we find that consumers responding to the lender's inferior solicitation offers have poorer credit quality attributes. This finding supports the argument that riskier type borrowers are liquidity or credit constrained and, thus, have higher reservation loan interest rates. We also find a more severe deterioration ex post in the credit quality of the booked accounts of inferior offer types relative to superior offers. After controlling for a cardholder's observable risk attributes, demographic characteristics, and adverse economic shocks, we find that cardholders who responded to the inferior credit card offers are significantly more likely to default ex post. Our results provide evidence on the importance of adverse selection effects in the credit card market.
Journal of Money, Credit and Banking – Wiley
Published: Jun 1, 2010
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.