Aysan, Ahmet Faruk and Müslim, Nusret Ahmet (2006): The Failure of Competition in the Credit Card Market in Turkey: The New Empirical Evidence.
Download (209kB) | Preview
The high credit card interest rates in Turkey attracted considerable attention in recent years to regulate the Turkish credit card industry. Before any regulation decision taken, there needs to be better conceptualization and analysis of the Turkish credit card market. First, we highlight the most striking aspects of the Turkish credit card market. After exposing the problem, we benefit from the existing theoretical and empirical studies on the structure of competition in the credit card industry. Potential reasons for the lack of competitions are denoted. Having the existing studies in mind, we finally, construct an empirical model to estimate the market structure in the Turkish credit card industry. Newly disseminated data on the Turkish credit card industry is first introduced in this paper. Our empirical results are based on the panel data set of 22 banks from the second quarter of 2001 to the third quarter of 2005. In addition to random and fixed effects regressions, instrumental variable fixed effect regressions are run on this sample. Our results robustly conclude that the credit cards interest rates in Turkey are economically insensitive to the changes in the cost of fund. This result shows lack of strong competition Turkish credit card market.
|Item Type:||MPRA Paper|
|Original Title:||The Failure of Competition in the Credit Card Market in Turkey: The New Empirical Evidence|
|Keywords:||Credit Cards; Regulation; Supervision; Financial Markets; Banking; Competition Market Structure|
|Subjects:||D - Microeconomics > D4 - Market Structure and Pricing > D41 - Perfect Competition
G - Financial Economics > G0 - General > G00 - General
D - Microeconomics > D4 - Market Structure and Pricing > D40 - General
|Depositing User:||Ahmet Faruk Aysan|
|Date Deposited:||30. Oct 2007|
|Last Modified:||14. Feb 2014 02:15|
Ausubel, L. M. (1991) The Failure of Competition in the Credit Card Market, American Economic Review, March, 50-81. Ayadi, F. O. (1997) Adverse Selection, Search Costs and Sticky Credit Card Rates, Financial Services Review, 6/1, 53-67. Calem, P. and L. Mester. (1995) Consumer Behavior and the Stickiness of Credit-Card Interest Rates, American Economic Review, 85, 1327-1336. Chakravorti, S. and T. To (1997) Why Do Merchants Accept Credit Card?, Federal Reserve Bank of Chicago Research Paper, September. Park, S. (1997) Option Value of Credit Lines as an Explanation of High Credit Card Rates, Federal Reserve Bank of New York Research Paper, 9702, February. Stango, V. (2003) Strategic Responses to Regulatory Threat in the Credit Card Market, Journal of Law and Economics, XLVI, October. Stiglitz, J. E. and Weiss, A. (1981) Credit Rationing in Markets with Imperfect Information, American Economic Review, June, 393-410. Alper, E. C. (2001) The Turkish Liquidity Crisis of 2000: What went wrong…, Russian and East European Finance and Trade, 37/6, 51 -71. Alper, E. C. and M. Ucer (1998) Some Observations on Turkish Inflation: A Random Walk Down the Past Decade, Bogazici Journal, 12/1, 7-38. Kaynak, E. and O. Kucukemiroglu and A. Ozmen (1995) Correlates of credit card acceptance and usage in an advanced developing Middle Eastern Country, Journal of Service Marketing, 9/4, 52-63. Kaynak, E. (2001) Consumers attitudes and intentions Towards Credit Card Usage in an Advanced Developing Country, Journal of Financial Services Marketing, 6/1, 24-39. Weiner, S. and J. Wright (2005) Interchange Fees in Various Countries: Developments and Determinants, Review of Network Economics, 4/4, 290-323.