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Nicholas S Souleles - One of the best experts on this subject based on the ideXlab platform.

  • do liquidity constraints and interest rates matter for consumer behavior evidence from Credit Card Data
    Quarterly Journal of Economics, 2002
    Co-Authors: David B Gross, Nicholas S Souleles
    Abstract:

    This paper utilizes a unique new Dataset of Credit Card accounts to analyze how people respond to changes in Credit supply. The Data consist of a panel of thousands of individual Credit Card accounts from several different Card issuers, with associated Credit bureau Data. We estimate both marginal propensities to consume (MPCs) out of liquidity and interest-rate elasticities. We also evaluate the ability of different models of consumption to rationalize our results, distinguishing the Permanent-Income Hypothesis (PIH), liquidity constraints, precautionary saving, and behavioral models. We find that increases in Credit limits generate an immediate and significant rise in debt, counter to the PIH. The average 'MPC out of liquidity' (dDebt/dLimit) ranges between 10%-14%. The MPC is much larger for people starting near their limits, consistent with binding liquidity constraints. However, the MPC is significant even for people starting well below their limit. We show this response is consistent with buffer-stock models of precautionary saving. Nonetheless there are other results that conventional models cannot easily explain, e.g. why so many people are borrowing on their Credit Cards, and simultaneously holding low yielding assets. Unlike most other studies, we also find strong effects from changes in account-specific interest rates. The long-run elasticity of debt to the interest rate is approximately -1.3. Less than half of this elasticity represents balance-shifting across Cards, with most reflecting net changes in total borrowing. The elasticity is larger for decreases in interest rates than for increases, which can explain the widespread use of temporary promotional rates. The elasticity is smaller for people starting near their Credit limits, again consistent with liquidity constraints.

  • do liquidity constraints and interest rates matter for consumer behavior evidence from Credit Card Data
    Social Science Research Network, 2001
    Co-Authors: David B Gross, Nicholas S Souleles
    Abstract:

    This paper utilizes a unique new Dataset of Credit Card accounts to analyze how people respond to changes in Credit supply. The Data consist of a panel of thousands of individual Credit Card accounts from several different Card issuers, with associated Credit bureau Data. We estimate both marginal propensities to consume (MPCs) out of liquidity and interest-rate elasticities. We also evaluate the ability of different models of consumption to rationalize our results, distinguishing the Permanent-Income Hypothesis (PIH), liquidity constraints, precautionary saving, and behavioral models. We find that increases in Credit limits generate an immediate and significant rise in debt, counter to the PIH. The average "MPC out of liquidity" (dDebt/dLimit) ranges between 10%-14%. The MPC is much larger for people starting near their limits, consistent with binding liquidity constraints. However, the MPC is significant even for people starting well below their limit. We show this response is consistent with buffer-stock models of precautionary saving. Nonetheless there are other results that conventional models cannot easily explain, for example, why so many people are borrowing on their Credit Cards, and simultaneously holding low yielding assets. Unlike most other studies, we also find strong effects from changes in account-specific interest rates. The long-run elasticity of debt to the interest rate is approximately -1.3. Less than half of this elasticity represents balance-shifting across Cards, with most reflecting net changes in total borrowing. The elasticity is larger for decreases in interest rates than for increases, which can explain the widespread use of temporary promotional rates. The elasticity is smaller for people starting near their Credit limits, again consistent with liquidity constraints.

  • consumer response to changes in Credit supply evidence from Credit Card Data
    Research Papers in Economics, 2000
    Co-Authors: David B Gross, Nicholas S Souleles
    Abstract:

    This paper utilizes a unique new Data set on Credit Card accounts to analyze how people respond to changes in Credit supply. The Data consist of a panel of several hundred thousand individual Credit Card accounts followed monthly for 24-36 months, from several different Card issuers, with associated Credit bureau Data. We estimate the dynamic effects of changes in the Credit limit and in interest rates, and consider the ability of different models of consumption and saving to rationalize these effects. We find that increases in Credit limits generate an immediate and significant rise in debt. This response is sharpest for people starting near their limit, providing evidence that liquidity constraints are binding. However, even people starting well below their limit significantly respond. We show this result is consistent with conventional models of precautionary savings. Nonetheless there are other results that conventional models cannot easily explain, such as the fact that many Credit Card borrowers simultaneously hold other low yielding assets. Unlike most other studies, we also find strong effects from changes in account-specific interest rates. Debt is particularly sensitive to large declines in interest rates, which can explain the widespread use of teaser rates. The long-run elasticity of debt to the interest rate is about -1.3. Less than half of this elasticity represents balance-switching across Cards, with most reflecting net changes in total borrowing. Overall, the results imply that the consumer plays a potentially important role in the transmission of monetary policy and other Credit shocks.

Jian Zhang - One of the best experts on this subject based on the ideXlab platform.

  • disguised corruption evidence from consumer Credit in china
    Journal of Financial Economics, 2020
    Co-Authors: Sumit Agarwal, Wenlan Qian, Amit Seru, Jian Zhang
    Abstract:

    Abstract Using a comprehensive sample of Credit Card Data from a leading Chinese bank, we show that government bureaucrats receive 16% higher Credit lines than non-bureaucrats with similar income and demographics, but their accounts experience a significantly higher likelihood of delinquency and debt forgiveness. Regions associated with greater Credit provision to bureaucrats open more branches and receive more deposits from the local government. After staggered corruption crackdowns of provincial-level political officials, the new Credit Cards originated to bureaucrats in exposed regions do not enjoy a Credit line premium, and bureaucrats’ delinquency and reinstatement rates are similar to those of non-bureaucrats.

  • disguised corruption evidence from consumer Credit in china
    Social Science Research Network, 2018
    Co-Authors: Sumit Agarwal, Wenlan Qian, Amit Seru, Jian Zhang
    Abstract:

    Using a comprehensive sample of Credit Card Data from a leading Chinese bank, we find that government bureaucrats receive 16% higher Credit lines than non-bureaucrats with similar income and demographics, but their accounts experience a significantly higher likelihood of delinquency and debt forgiveness. These patterns are concentrated among bureaucrats with greater power and located in more “corrupt” cities. Areas associated with greater Credit provision to bureaucrats open more branches and receive more deposits from the local government. Using staggered crackdowns of provincial-level political officials as exogenous shocks to the risk of corruption investigation, we find that the new Credit Cards originated to bureaucrats do not enjoy a Credit line premium, and bureaucrats’ delinquency and reinstatement rates are no higher than those of non-bureaucrats in the treated provinces during the post-crackdown period. We use our estimates to infer the size of corruption and explore the impact on aggregate economic outcomes.

Paul Douthit - One of the best experts on this subject based on the ideXlab platform.

  • st e is the most cost effective measure for comply with payment Card industry pci Data security standard
    Financial Cryptography, 2008
    Co-Authors: Ken Huang, Paul Douthit
    Abstract:

    In September of 2006, the five leading payment brands formed an independent council to manage the Payment Card Industry (PCI) Data Security Standard (DSS). American Express, Discover Financial Services, JCB, MasterCard Worldwide and Visa International saw the need to secure payment account Data in a globally consistent manner. As such, the financial institutions which store, process and transact the Credit Card must comply with the PCI/DSS. The Non-compliance fines can reach up to US $500,000 per incident including the public disclosure of breaches. Financial Institution can implement very broad security controls to comply with the PCI/DSS standard. The cost can be prohibitive. This poster argues that the most cost effective security measure is to conduct a Security Testing and Evaluation (ST&E) project before the expensive auditing performed by a PCI DSS Qualified Security Assessor (QSA) Company. We have proposed 5 distinct phases of ST&E, and what it means to the CIO/CTO of the financial institutions. The five phases of ST&E are 1) Planning, 2) Develop Evaluation Methods and Tool Selection, 3) Test Execution and Reporting, 4) Corrective Measures Recommendation and 5) Re-Testing. During the Planning Phase, the scope and rule of engagement is defined, and the requirement of the ST&E is signed off. The scope depends on identifying the mission critical applications which host or process the Credit Card Data. For example, the web server, the application server and Database can all be used for processing or storing the Credit Card information. And the application may have dependency on other applications. So the communication channels between different applications could be the crucial components and are in scope. The rule of engagement identity all stakeholders of the ST&E project, and define the responsibilities of each part involved. A poorly defined rule of engagement would be fatal for the ST&E project. During the second phase, the testing and evaluation method is defined and agreed upon by all stakeholder involved in the ST&E. The testing method could be black box testing, meaning that the tester has no knowledge of the systems and try different ways to find the security vulnerabilities. Another testing method is the white box testing. During the white box testing, the tester reviews the code and different configuration files, and then constructs the attack methods which could hack into the system. This method is more cost effective and should be used to find the majority of the securities holes in the system. The third phase is the Testing Execution and Reporting, the testers could use both manual ethnic hacking methods or automated tool to find the security vulnerabilities in the system. Keep in mind that the automated tool can only find very small portion of the vulnerabilities. Thus, the advanced manual ethnic hacking skills are crucial to the success of the ST&E project. After the testing execution, the tester needs to analyze the results to identity the false positives and then produce the report which will be the input to the next phase of the ST&E. The forth phase is the Corrective Measures Recommendation. If the application impacted is developed in house, the corrective measure could be applied by working with the developers in house. Otherwise, the tester can work with stakeholders of ST&E project to find the appropriate patches from the vendor or report the bug with the vendor if the patch is not available. The final phase is the Re-testing phase. We emphasize that security testing is not a once and done evaluation. In order to maintain an acceptable level of security, the system must be retested periodically, as well as when the developers make any changes to the system. By developing a reoccurring phase of retesting, Phase Five depends upon the system passing its first ST&E evaluation. Once the system is deemed secure after the initial ST&E, a summation of the results can then be presented to the stakeholders. At that point, the frequency for which the system will be retested can be established. In this poster presentation, we will demo some common vulnerabilities in the financial applications, such as cross site script attack, SQL injection, weak session management, improver exception handling, and weak encryption. After the demo, we will present in detail the ST&E methodology and how the CTO/CIO can benefit by implementing the ST&E in house, and how ST&E can benefit organizations to achieve the PCI/DSS compliance.

Sumit Agarwal - One of the best experts on this subject based on the ideXlab platform.

  • disguised corruption evidence from consumer Credit in china
    Journal of Financial Economics, 2020
    Co-Authors: Sumit Agarwal, Wenlan Qian, Amit Seru, Jian Zhang
    Abstract:

    Abstract Using a comprehensive sample of Credit Card Data from a leading Chinese bank, we show that government bureaucrats receive 16% higher Credit lines than non-bureaucrats with similar income and demographics, but their accounts experience a significantly higher likelihood of delinquency and debt forgiveness. Regions associated with greater Credit provision to bureaucrats open more branches and receive more deposits from the local government. After staggered corruption crackdowns of provincial-level political officials, the new Credit Cards originated to bureaucrats in exposed regions do not enjoy a Credit line premium, and bureaucrats’ delinquency and reinstatement rates are similar to those of non-bureaucrats.

  • disguised corruption evidence from consumer Credit in china
    Social Science Research Network, 2018
    Co-Authors: Sumit Agarwal, Wenlan Qian, Amit Seru, Jian Zhang
    Abstract:

    Using a comprehensive sample of Credit Card Data from a leading Chinese bank, we find that government bureaucrats receive 16% higher Credit lines than non-bureaucrats with similar income and demographics, but their accounts experience a significantly higher likelihood of delinquency and debt forgiveness. These patterns are concentrated among bureaucrats with greater power and located in more “corrupt” cities. Areas associated with greater Credit provision to bureaucrats open more branches and receive more deposits from the local government. Using staggered crackdowns of provincial-level political officials as exogenous shocks to the risk of corruption investigation, we find that the new Credit Cards originated to bureaucrats do not enjoy a Credit line premium, and bureaucrats’ delinquency and reinstatement rates are no higher than those of non-bureaucrats in the treated provinces during the post-crackdown period. We use our estimates to infer the size of corruption and explore the impact on aggregate economic outcomes.

  • bankruptcy exemptions garnishment laws and consumer default behavior an empirical analysis of Credit Card Data
    2005
    Co-Authors: Sumit Agarwal, Chunlin Liu, Lawrence Mielnicki
    Abstract:

    In this paper, we examine how homestead, personal property, and garnishment laws affect consumer's default behavior by focusing on the Credit Card market. After controlling for Credit supply and "shock effect" variables we investigate whether consumer propensity for formal and informal bankruptcy changes with respect to the exemption levels those resident Cardholders enjoy. Our results show that loose garnishment and property exemption laws increase default. However, a closer look reveals that loose garnishment and property laws encourage informal bankruptcy and loose homestead and property laws encourage formal bankruptcy. The results show a certain degree of substitutability between formal and informal bankruptcy. The substitutability raises concerns about the current bankruptcy reform since this will not necessarily improve the default rates even thought it may reduce bankruptcy filings.

  • Exemption laws and consumer delinquency and bankruptcy behavior: an empirical analysis of Credit Card Data
    The Quarterly Review of Economics and Finance, 2003
    Co-Authors: Sumit Agarwal, Chunlin Liu, Lawrence Mielnicki
    Abstract:

    Abstract In this paper, we examine how homestead, personal property, and garnishment exemption laws affect consumer’s delinquency and bankruptcy behavior by focusing on the Credit Card market. In particular, after controlling for Credit supply and shock effects like unemployment we investigate whether consumer propensity for delinquency, formal bankruptcy, and informal bankruptcy changes with respect to the exemption levels those resident Cardholders enjoy. Our results show that loose garnishment and property exemption laws increase delinquency. Furthermore, while loose garnishment and property exemption laws encourage informal bankruptcy, loose homestead and property exemption laws encourage formal bankruptcy. These results imply a certain degree of substitutability between formal and informal bankruptcy.

Martin Hepp - One of the best experts on this subject based on the ideXlab platform.

  • Neural Data mining for Credit Card fraud detection
    Tools with Artificial Intelligence, 1999. Proceedings. 11th IEEE International Conference on, 1999
    Co-Authors: R. Brause, T. Langsdorf, Martin Hepp
    Abstract:

    The prevention of Credit Card fraud is an important application for prediction techniques. One major obstacle for using neural network training techniques is the high necessary diagnostic quality: since only one financial transaction in a thousand is invalid no prediction success less than 99.9% is acceptable. Because of these Credit Card transaction requirements, completely new concepts had to be developed and tested on real Credit Card Data. This paper shows how advanced Data mining techniques and a neural network algorithm can be combined successfully to obtain a high fraud coverage combined with a low false alarm rate