ECB paper on credit card users under binding constraints
A European Central Bank paper published on Monday finds evidence that credit card users often do not change their consumption behaviour in response to interest rate increases on transactions.
Sule Alan, Ruxandra Dumitrescu and Gyongyi Loranth, the paper's authors, test the interest rate sensitivity of subprime credit card borrowers using a unique panel data set from a UK credit card company.
They find that individuals who tend to utilise their credit limits fully do not reduce their demand for
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