During several episodes of declining or rising interest rate changes in the 1980s and 1990s, credit card rates changed little. At the same time, credit cards consistently earned higher returns than most other bank products. Ausenbel (1991) argues the reason is that the industry deviates from a...

To explain persistence of credit card interest rates at relatively high levels, Calem and Mester (AER, 1995) argued that informational barriers create switching costs for high-balance customers. As evidence, using data from the 1989 Survey of Consumer Finances, they showed that these households...

We present evidence on the objective function of bank management - that is, are they risk neutral and minimize expected profits or are they risk-averse and trade off profit for risk reduction? We extend the model of Hughes and Mester (1993) to allow a bank’s choice of its financial capital...

We present evidence on the objective function of bank management - that is, are they risk neutral and minimize expected profits or are they risk-averse and trade off profit for risk reduction? We extend the model of Hughes and Mester (1993) to allow a bank’s choice of its financial capital...

We empirically study how the underlying riskiness of the pool of home equity line of credit originations is affected over the credit cycle. Drawing from the largest existing database of U.S. home equity lines of credit, we use county-level aggregates of these loans to estimate panel regressions...

While there has been considerable research empirically quantifying and simulating the roleof borrowing constraints on homeownership rates, the primary focus of this work has been onmeasuring the relative importance of income and wealth constraints with respect to ownershipoutcomes. An important...