Borrowing High versus Borrowing Higher: Price Dispersion and Shopping Behavior in the US Credit Card Market

• 成果类型: Article
• 署名作者: Stango, Victor; Zinman, Jonathan
• 署名单位: University of California System; University of California Davis; Dartmouth College; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhv072
• 发表日期: 2016
• 页码: 979
• 关键词: switching costs; COMPETITION; search; industry

摘要

We document substantial cross-individual dispersion in U.S. credit card borrowing costs, even after controlling for borrower risk and card characteristics. That remaining dispersion arises because cross-lender pricing heterogeneity generates dispersion in annual percentage rate (APR) offers to borrowers, and borrowers vary in shopping intensity. Our empirics match administrative data to self-reported card shopping intensity and use instruments suggested by fair lending law to account for the endogeneity between APRs and search. The results show that shoppers versus nonshoppers pay APRs as different as those paid by borrowers in the best versus worst credit score deciles. We discuss implications for policy and practice.