We build a framework to understand the effects of regulatory interventions in credit markets, such as caps on interest rates and higher compliance costs for lenders. We focus on the credit card market, in which we observe U.S. consumers borrowing at high and very dispersed interest rates,...

This written testimony was presented on April 26, 2007, at a hearing on "Credit Card Practices: Current Consumer and Regulatory Issues," before the Subcommittee on Financial Institutions and Consumer Credit of the U.S. House of Representatives Committee on Financial Services. The testimony...