Regulatory Interventions in Consumer Financial Markets: The Case of Credit Cards

• 成果类型: Article
• 署名作者: Galenianos, Manolis; Gavazza, Alessandro
• 署名单位: University of London; Royal Holloway University London; University of London; London School Economics & Political Science
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1093/jeea/jvac016
• 发表日期: 2022
• 页码: 1897-1932
• 关键词: search; MODEL; COMPETITION; distributions; BEHAVIOR; COSTS

摘要

We build a framework to understand the effects of regulatory interventions in credit markets, such as caps on interest rates. We focus on the credit card market, in which we observe US consumers borrowing at high and very dispersed interest rates despite receiving many credit card offers. Our framework includes two main features to account for these patterns: the endogenous effort of examining offers and product differentiation. Our calibration suggests that most borrowers examine few of the offers they receive, and thereby forego cards with low interest rates and high non-price benefits. The calibrated model implies that interest-rate caps reduce credit supply and significantly curb lenders' market power, thereby increasing consumer surplus. Moderate caps may yield larger gains in consumer surplus than tighter ones.