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Prepayment risk is a major consideration in the US credit card market. According to industry studies, about 17% of balances are transferred annually. Using a dynamic model of repricing, this paper analyzes the impact of prepayment risk on the functioning of the credit card market. We show that...
Persistent link: https://www.econbiz.de/10010886804
output and TFP, respectively.
Persistent link: https://www.econbiz.de/10010554940
We develop a model of credit card lending and consumer bankruptcy in which enforcement of debt repayment is endogenously determined within the lending industry. Our focus on enforcement of credit contracts is motivated by existing consumer debt collection practices, and is consistent with the...
Persistent link: https://www.econbiz.de/10010748001
This paper evaluates the performance of leading micro-founded pricing-to-market frictions vis-a-vis a set of robust stylized facts about international prices. In order to make that evaluation meaningful, we embed each friction into a unified IRBC framework and parameterize the models in a...
Persistent link: https://www.econbiz.de/10011080163
The paper studies the effects of non-exclusivity of credit card contracts on the provision of insurance through the institution of personal bankruptcy. In our model, lenders can continually observe borrower's time-varying creditworthiness and provide credit to them by undercutting (poaching) the...
Persistent link: https://www.econbiz.de/10011081556